A judge has rejected a $30 billion antitrust settlement through which Visa and Mastercard agreed to limit the interchange or swipe fees that they charge merchants including convenience-store retailers that accept their credit and debit cards, Reuters reported.
U.S. District Judge Margo Brodie of the U.S. District Court for the Eastern District of New York in Brooklyn said she was not likely to grant final approval to the settlement, and therefore denied the request by a group of merchants, primarily small businesses, for preliminary approval, the news agency said.
Last week, Brodie denied the card companies’ motion for summary judgment, dismissing the card companies’ argument that the merchants lacked standing as direct purchasers of card services under Supreme Court precedent.
In March, Visa and Mastercard reached a nearly $30 billion settlement to limit credit and debit card fees for merchants by reducing swipe fees for at least five years. The settlement agreement with merchants would resolve claims against Visa, Mastercard and other defendants brought by the injunctive relief class in the lawsuit entitled In re Payment Card Interchange Fee and Merchant Discount Antitrust Litigation.
Many merchants and trade groups including the National Retail Federation opposed the accord, saying card fees would remain too high, while Visa and Mastercard would retain too much control over card transactions.
Brodie’s decision could force Visa and Mastercard to negotiate a settlement more favorable to merchants or go to trial, said Reuters.
Brodie will issue a written opinion explaining her reasoning after giving merchants and the card networks until June 28 to propose redactions.
The judge’s decision does not affect an earlier $5.6 billion class-action swipe fee settlement among Visa, Mastercard and about 12 million merchants.
A federal appeals court in Manhattan upheld that accord in March 2023, seven years after throwing out a $7.25 billion settlement that short-changed some retailers.
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