Jonathan Stempel
NEW YORK (Reuters) – Visa (NYSE:) and Mastercard’s (NYSE:) proposed $30 billion antitrust settlement to cap credit and debit card fees for merchants is in jeopardy after a New York judge made clear that is preparing to reject the agreement.
U.S. District Judge Margo Brody in Brooklyn told the card networks’ lawyers and objectors at Thursday’s hearing that she “probably will not approve the settlement,” according to court records.
She plans to write an opinion explaining her decision and reasoning.
Both card networks said they were disappointed. Mastercard called the settlement a “fair resolution” that gave businesses more flexibility in managing card transactions, while Visa called it a “adequate resolution” to a case that spanned nearly 19 years.
The settlement, announced March 26, was intended to resolve the majority of claims in nationwide litigation, with small businesses making up more than 90% of settled merchants.
The companies have long complained that Visa and Mastercard charge excessive payment processing fees or interchange fees for processing credit and debt card payments and illegally prevent them from directing customers to cheaper forms of payment.
Swipe fees totaled $172 billion in 2023 and have more than doubled over the past decade, according to the Merchants Payments Coalition, which represents retailers, grocers, convenience stores and gas stations.
Under the agreement, average swipe fees of 1.5% to 3.5% would drop by at least 0.04 percentage points over three years. Visa and Mastercard also agreed to cap rates for five years and eliminate anti-regulatory provisions.
Opponents included the National Retail Federation, the world’s largest retail group.
He called the settlement “manifestly insufficient” and its benefits “meager and temporary,” saying it would still allow Visa and Mastercard to dictate payment processing fees and impose a “virtually limitless” bar on future claims by merchants.
The case involves an antitrust litigation involving payment card interchange fees and merchant rebates, U.S. District Court, Eastern District of New York, No. 05-md-01720.