In a recent development, a federal judge in Brooklyn rejected a $30 billion settlement proposed by Visa and Mastercard to address overpaid swipe fees by merchants. The judge, Margo Brodie, stated that the estimated $6 billion annual savings for merchants was inadequate compared to the $100 billion in fees paid to accept Visa and Mastercard transactions in 2023. She suggested that Visa and Mastercard could likely withstand a much greater settlement, highlighting the need for a more substantial resolution.
The antitrust litigation, which began in 2005, could potentially go to trial if a new settlement agreement is not reached. Both Visa and Mastercard expressed disappointment at the rejection of the proposed settlement, with Visa emphasizing the importance of direct resolution with merchants. The proposed changes, including a slight reduction in swipe fees and capped fees for a certain period, were deemed insufficient by Judge Brodie, who stated that they did not provide the best possible recovery for merchants.
The ongoing case, officially titled In re Payment Card Interchange Fee and Merchant Discount Antitrust Litigation, has seen objections from many merchants and trade groups, including the National Retail Federation. Judge Brodie’s assessment underscores the challenges in reaching a fair resolution that adequately addresses the overpaid swipe fees issue, indicating the potential for further legal proceedings if a more substantial settlement is not reached.