In Washington, a coffee shop displays signs for Visa, MasterCard, and Discover. A proposed $30 billion settlement between Visa, Mastercard, and merchants is now on shaky ground. U.S. District Judge Margo Brodie in Brooklyn indicated at a recent hearing that she is “likely not to approve the settlement,” according to court records.
Judge Brodie plans to issue a detailed opinion explaining her decision. Both Visa and Mastercard expressed disappointment, with Mastercard describing the settlement as a “fair resolution” that offered businesses greater flexibility, while Visa deemed it an “appropriate resolution” to the nearly two-decade-old litigation.
Announced on March 26, the settlement aimed to resolve the bulk of the nationwide litigation, which included claims from more than 90% of the settling merchants, primarily small businesses. Merchants have long criticized Visa and Mastercard for excessive swipe fees, or interchange fees, for processing card payments, and for prohibiting merchants from encouraging customers to use cheaper payment methods.
In 2023, swipe fees amounted to $172 billion, more than doubling over the past decade, according to the Merchants Payments Coalition. The settlement proposed to reduce the average 1.5% to 3.5% swipe fee by at least 0.04 percentage points for three years. Additionally, Visa and Mastercard agreed to cap rates for five years and eliminate anti-steering provisions.
However, the National Retail Federation, representing the world’s largest retailer trade group, opposed the settlement. It labeled the settlement as “manifestly insufficient,” arguing that the benefits were “meager and temporary,” and would still allow Visa and Mastercard to control swipe fees while imposing a “virtually limitless” ban on future claims by merchants.
The case is known as In re Payment Card Interchange Fee and Merchant Discount Antitrust Litigation, U.S. District Court, Eastern District of New York, No. 05-md-01720.
