NEW YORK, NY – In a recent development, a federal judge expressed skepticism about the proposed $30 billion settlement between card issuers Visa and Mastercard and merchants regarding swipe fees. Judge Margo Brodie of the Eastern District of New York hinted that the card issuers could likely withstand a significantly larger settlement than the one she rejected last week.
The dispute around swipe fees, also known as interchange fees, has been ongoing since 2005. The rejected settlement aimed to lower and cap these fees, offering some relief to over 12 million merchants. However, Judge Brodie deemed the proposed $6 billion in annual savings for merchants as insufficient compared to the estimated $100 billion in fees paid to Visa and Mastercard in 2023.
Despite the setback, Visa remains committed to finding a resolution directly with merchants and is exploring all options as the case progresses. The company emphasized the importance of maintaining the security, innovation, rewards, and access to credit that are vital for American consumers and small businesses.
On the other hand, Mastercard did not immediately respond to requests for comment following the judge’s decision. The rejected settlement would have provided a slight reduction in swipe fees for three years, capped fees for five years, and given merchants more flexibility in imposing surcharges.
Overall, the judge’s rejection of the proposed settlement highlights the challenges in reaching a consensus between card issuers and merchants in the ongoing antitrust litigation. The ruling underscores the complexity of balancing the interests of different stakeholders in the payment ecosystem.
As the case evolves, it remains to be seen whether the parties involved can reach a new settlement that satisfies the judge’s criteria. The outcome of this legal battle could have significant implications for the future of swipe fees and the relationship between card issuers and merchants in the payment industry.