Federal Judge Blocks $30 Billion Settlement Between Visa and Mastercard Over Swipe Fees

A federal judge has rejected a proposed $30 billion antitrust settlement between Visa and Mastercard aimed at limiting fees charged to merchants. U.S. District Judge Margo Brodie, presiding in Brooklyn, expressed skepticism about granting final approval to the settlement, which was primarily supported by a group of small business merchants. The decision comes amid significant opposition from various merchants and trade organizations, including the National Retail Federation, who argued that the settlement would not sufficiently reduce card fees or diminish the control Visa and Mastercard hold over transactions. The judge's ruling may compel Visa and Mastercard to renegotiate terms that are more favorable to merchants or potentially face a trial with an uncertain outcome. Merchants and the card networks have until Friday to request redactions to Judge Brodie's forthcoming written opinion, which will detail her reasoning behind the decision. Stephanie Martz, the National Retail Federation's Chief Administrative Officer, criticized the settlement, stating it lacked consensus from the retail industry and would not address ongoing anticompetitive practices. The settlement, initially announced on March 26, aimed to resolve longstanding litigation dating back to 2005 regarding swipe fees, which typically range from 1.5% to 3.5% per transaction. In 2023, these fees amounted to approximately $72 billion, benefiting banks and card issuers. The proposed agreement included provisions to lower average swipe fees and grant merchants more flexibility in offering discounts, but ultimately fell short of expectations.