NEW YORK, Thursday, June 20, 2024 – A proposed $30 billion settlement between Visa, Mastercard, and merchants to limit credit and debit card swipe fees is in jeopardy of being thrown out by a federal judge.1
US District Judge Margo Brodie in Brooklyn signaled her intention to reject the agreement during a hearing on Thursday, according to court records. She will issue a formal opinion outlining her reasoning.
Both Visa and Mastercard expressed disappointment with the potential rejection. Mastercard called the settlement a “fair resolution” offering businesses more control over card transactions, while Visa deemed it an “appropriate resolution” to the nearly 19-year-old case.
The settlement, announced in March, aimed to resolve most claims in a nationwide lawsuit. Small businesses comprised over 90% of the participating merchants.
Merchants have long argued that Visa and Mastercard charge excessive swipe fees for processing credit and debit card transactions. They also allege the companies illegally prevent them from steering customers towards cheaper payment methods.
According to the Merchants Payments Coalition, representing retailers, grocers, and gas stations, swipe fees reached $172 billion in 2023, more than doubling in the last decade.
The proposed settlement offered a modest reduction in average swipe fees (1.5% to 3.5%) for three years, along with a five-year cap on rates and the removal of anti-steering provisions.
However, the National Retail Federation, the world’s largest retail trade group, objected to the settlement.
They argued it was “manifestly insufficient” with “meager and temporary” benefits. The group maintains the settlement allows Visa and Mastercard to retain control over swipe fees and imposes overly restrictive limitations on future merchant claims.
- reuters.com: https://www.reuters.com/legal/visa-mastercard-30-billion-fee-settlement-peril-2024-06-13/[↩]
