Judge says Visa, Mastercard can likely handle swipe-fee settlement bigger than $30 billion

A federal decide mentioned Friday that card issuers Visa and Mastercard might likely face up to a “substantially greater” settlement with retailers who argued they overpaid swipe charges than the proposed $30 billion settlement she rejected final week.

U.S. District Judge Margo Brodie of the Eastern District of New York supplied that evaluation in an 88-page opinion she launched Friday, simply three days after she rejected the preliminary $30 billion settlement.

The settlement would have lowered and capped swipe charges, often known as interchange charges, which might be paid by over 12 million retailers to handle Visa and Mastercard transactions.

The decide referred to as the estimated $6 billion in annual financial savings for retailers a “paltry” quantity in comparison with the estimated $100 billion in charges they paid to Visa and Mastercard in 2023.

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A federal decide mentioned Visa and Mastercard might likely face up to a bigger settlement than the proposed $30 billion deal she rejected. (Jakub Porzycki/NurPhoto by way of Getty Images/File)

“Without evidence of Visa’s and Mastercard’s profitability, the court cannot say with certainty that defendants can withstand a greater judgment; however, the evidence strongly suggests that they could withstand a substantially greater judgment,” Brodie wrote.

The long-running antitrust litigation round swipe charges started in 2005 and will go to trial if the cardboard issuers and retailers aren’t in a position to agree on a brand new settlement that passes the decide’s assessment.

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The proposed settlement would have barely lowered swipe charges for 3 years, capped charges for 5 years and allowed retailers extra leeway to impose surcharges. (Robert Nickelsberg/Getty Images/File)

“While we are disappointed with the judge’s decision, we continue to believe that direct resolution with merchants is the best way forward and are evaluating all options as the case proceeds,” Visa informed FOX Business in a press release. 

“The U.S. payments ecosystem is the most advanced in the world, and our focus is on maintaining the security, innovation, rewards and access to credit that are critical to American consumers and small businesses that power our economy,” Visa added.

Mastercard didn’t instantly reply to a request for remark.

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Visa mentioned it nonetheless believes a direct decision between card issuers and retailers is the very best consequence regardless of the decide rejecting a proposed settlement. (Andrew Harrer/Bloomberg by way of Getty Images/File)

In the wake of the ruling, Mastercard beforehand expressed disappointment and mentioned the settlement would’ve inspired competitors and given hundreds of thousands of companies “substantial certainty and enormous value in how they manage their card acceptance activities.”

Under the phrases of the settlement rejected by the decide, card issuers would’ve lowered the everyday 1.5% to three.5% swipe fee by 0.04 proportion factors for 3 years, capped charges for 5 years and given retailers extra room to impose surcharges.

Brodie mentioned the proposed modifications fell wanting the “best possible” restoration as a result of it stored charges considerably above the place they might be with out the alleged antitrust violations and nonetheless “saddled” retailers with the “Honor All Cards” rule, which requires them to simply accept all Visa and Mastercard playing cards or none.

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Many retailers objected to the settlement, as did some commerce teams, together with the National Retail Federation.

Reuters contributed to this report.