Written by Jonathan Stemple
NEW YORK (Reuters) – Visa (NYSE:) and MasterCard (NYSE:)'s proposed $30 billion antitrust settlement to limit credit and debit card fees for merchants is in jeopardy, after a New York judge signaled she was preparing to reject the agreement.
U.S. District Judge Margo Brody in Brooklyn told lawyers for the card networks and objectors at a hearing Thursday that she “probably will not approve the settlement,” according to court records.
She plans to write an opinion explaining her decision and the reasons behind it.
Both card networks said they were disappointed. Mastercard called the settlement a “fair solution” that gave businesses greater flexibility in managing card transactions, and Visa called it an “appropriate resolution” to the nearly 19-year-old case.
The settlement announced March 26 was intended to resolve most of the claims in the nationwide lawsuits, where small businesses make up more than 90% of the settling merchants.
The companies have long complained that Visa and Mastercard charge excessive swipe fees, or interchange fees, to process credit card and debt payments, illegally preventing them from steering customers toward cheaper payment methods.
Swipe fees totaled $172 billion in 2023, and have doubled in the past decade, according to the Merchant Payments Alliance, which represents retailers, grocery stores, convenience stores and gas stations.
Under the settlement, average withdrawal fees of 1.5% to 3.5% would decrease by at least 0.04 percentage points for three years. Visa and Mastercard also agreed to cap rates for five years and remove anti-directive provisions.
Among the objectors was the National Retail Federation, the world's largest retail trade group.
It called the settlement “manifestly inadequate” and its benefits “meager and temporary,” saying it would still allow Visa and MasterCard to dictate withdrawal fees, and impose an “almost unlimited” ban on future claims by merchants.
The case is Antitrust Litigation Concerning Payment and Debit Card Interchange Fees, U.S. District Court, Eastern District of New York, No. 05-md-01720.
