U.S. District Judge Margo Brodie in Brooklyn informed attorneys for the card networks and the objectors at a hearing on Thursday that she is “likely not to approve the settlement,” according to court records. She plans to issue a written opinion detailing her decision.
Both Visa and Mastercard expressed disappointment. Mastercard described the settlement as a “fair resolution” that offered businesses greater flexibility in managing card transactions, while Visa termed it an “appropriate resolution” to the nearly 19-year-old case.
The settlement, announced on March 26, aimed to resolve most claims in the extensive litigation, involving more than 90% of the small businesses among the settling merchants.
Merchants have long criticized Visa and Mastercard for charging excessive swipe fees, or interchange fees, for processing credit and debit card payments, and for preventing them from directing customers towards cheaper payment methods.
According to the Merchants Payments Coalition, which represents retailers, grocers, convenience stores, and gas stations, swipe fees amounted to $172 billion in 2023, more than doubling over the last decade.
Under the proposed settlement, the average swipe fee of 1.5% to 3.5% would decrease by at least 0.04 percentage points for three years. Visa and Mastercard also agreed to cap rates for five years and remove anti-steering provisions.
The National Retail Federation, the world’s largest retail trade group, was among the objectors. It criticized the settlement as “manifestly insufficient” with benefits that were “meager and temporary,” arguing that it would still allow Visa and Mastercard to control swipe fees and impose a “virtually limitless” ban on future claims by merchants.
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