Amidst the towering legal offices of Grant & Eisenhofer in Wilmington, Delaware, a $170 million settlement hangs in limbo. After nearly two decades of legal wrangling, a federal judge in Brooklyn dealt a decisive blow to a proposed antitrust agreement between Visa, Mastercard, and a consortium of merchants. The deal aimed to curb swipe fees—those pesky charges merchants incur when customers pay with plastic.
Judge Margo Brodie’s rejection of the settlement, encapsulated in an 88-page ruling, underscored its shortcomings. While she didn’t contest the $170 million fee requested by class action attorneys, she deemed the settlement inadequate in addressing merchants’ grievances. Brodie pointed out that the accord fell short of significantly reducing fees, maintaining a contentious “Honor All Cards” rule that forces merchants to accept all Visa and Mastercard types or none at all.
This setback marks a rare instance where a preliminary class action settlement failed to secure judicial approval. Experts suggest that renegotiations are inevitable, potentially demanding a higher fee request given the protracted legal battle and the substantial sums involved.
Beyond legal circles, the rejected settlement drew criticism from major retailers like Walmart and Target, along with industry groups concerned about its efficacy. Stephanie Martz of the National Retail Federation highlighted broader reservations about the deal’s overall impact on merchant relations.
Looking ahead, the fate of the $170 million remains uncertain, hanging on the outcomes of renegotiations and further legal maneuvers. As the legal saga unfolds, stakeholders brace for potential revisions that could reshape the landscape of swipe fee regulations for years to come.
