Brooklyn, New York – A federal judge in Brooklyn rejected a proposed $30 billion antitrust settlement between Visa and Mastercard and a group of merchants, primarily consisting of small businesses. District Judge Margo Brodie made it clear that she was unlikely to approve the settlement, which aimed to limit the fees charged by the credit card companies to merchants who accept their cards. The decision was met with opposition from various merchant groups, including the National Retail Federation, citing concerns that fees would remain high and the card companies would maintain too much control over transactions.
The ruling could potentially push Visa and Mastercard to renegotiate a new agreement more favorable to merchants or face a trial with uncertain outcomes. Merchants and card networks were given until June 28 to request any edits to Judge Brodie’s written opinion explaining the decision.
Stephanie Martz, the Chief Administrative Officer and General Counsel of the National Retail Federation, expressed that the proposed settlement, not agreed upon by the retail industry as a whole, failed to address anticompetitive practices in the payments market. Visa issued a statement expressing disappointment in the court’s stance on the settlement, emphasizing the importance of continued engagement between industry players and merchants going forward.
The rejected settlement, announced on March 26, aimed to resolve long-standing litigation since 2005 regarding swipe fees imposed on merchants by Visa and Mastercard. These fees make up a significant portion of banks’ profits, fueling rewards programs that incentivize consumer spending.
While the proposed settlement sought to reduce average swipe fees and increase merchant discretion in offering discounts or surcharges, many merchants objected to certain restrictions, including rules preventing them from explaining to customers why some cards cost more than others. The judge’s decision does not impact a previous $5.6 billion swipe fee settlement reached in a class action case involving Visa, Mastercard, and millions of merchants.