(PatriotPostNews.com) — The $30 billion antitrust settlement between Visa and Mastercard, in which the companies agreed to cap the fees they charge retailers for accepting their cards, has been rejected by a federal judge.
A group of merchants, mostly small companies, had asked for preliminary clearance, but U.S. District Judge Margo Brodie of New York’s Eastern District refused their request.
According to the deal’s opponents, card costs would stay too high, and Visa and Mastercard would retain too much influence over card transactions. As a result of the judge’s ruling, Visa and Mastercard may be forced to renegotiate their merchant-friendly arrangement or face the uncertainty of trial.
The settlement announced on March 26th was meant to address the majority of the lawsuits that started in 2005 about the interchange fees or swipe fees that the card networks determine and that businesses have to pay to accept Visa and Mastercard. In 2023, these costs, which usually range from 1.5 to 3.5 percent of each transaction, amounted to almost $72 billion. Financial institutions and other card issuers benefit from them, and a large portion of that profit goes into customer incentive programs.
A three-year decline of at least 0.04 percentage points in average swipe fees and a five-year maintenance of at least a 0.07 percentage point decline below the current average were terms of the settlement. In addition to removing anti-steering measures that prohibited retailers from pushing customers to less expensive cards, Visa and Mastercard also agreed to restrict rates for five years. The proposed settlement would have given merchants greater leeway to decide whether to levy a premium or offer a discount.
Many merchants strongly opposed rules prohibiting businesses from informing clients of the reasoning behind the pricing of different cards and from directing them to cheaper alternatives. Although buying with cash frequently entitles customers to better discounts, some have claimed that the fees actually force customers to spend more. Trade groups claim that businesses would have received little long-term assistance and that it would have been more difficult for them to contest the settlement in the future.
Brodie will compose a written judgment outlining her rationale for the order; merchants and card networks have until Friday to request redactions. According to Stephanie Martz, chief antitrust officer and general counsel for the National Retail Federation, “The retail industry as a whole never agreed to this settlement, and it would have done nothing to end anti-competitive practices and fix our nation’s broken payments market.”
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