NEW YORK (Reuters) – Visa and Mastercard face uncertainty as a New York judge signals potential rejection of their $30 billion antitrust settlement. The accord aimed to curb credit and debit card fees for merchants.
During Thursday’s hearing, U.S. District Judge Margo Brodie indicated she will likely reject the proposed settlement, as per 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, and Visa called it an “appropriate resolution” to the nearly 19-year-old case.
The settlement announced on March 26 was intended to resolve most claims in the nationwide litigation, with small businesses comprising more than 90% of the settling merchants.
Businesses have criticized Visa and Mastercard for their high swipe fees and restrictions on steering customers to cheaper payment methods. These complaints underscore ongoing legal challenges regarding antitrust practices in the credit card industry.
Swipe fees totaled $172 billion in 2023, and have more than doubled in the last decade, according to the Merchants Payments Coalition, which represents retailers, grocers, convenience stores and gas stations.
Under the settlement, the average 1.5% to 3.5% swipe fee would fall by at least 0.04 percentage points for three years. Visa and Mastercard also agreed to cap rates for five years and remove anti-steering provisions.
The fee settlement peril centers around legal and regulatory challenges that could potentially unravel the agreement. Critics argue that the settlement terms may not adequately address competitive concerns within the payment processing industry.
Moreover, regulatory bodies have expressed reservations about the impact of the settlement on market dynamics and consumer interests.
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