A financial expert talks about the “serious” consequences of retail credit cards.
A federal judge said this on Friday Visa and Mastercard card issuers may resist a “substantially larger” deal with traders who argued they paid more in slippage fees than the proposed $30 billion settlement it rejected last week.
U.S. District Judge Margo Brodie of the Eastern District of New York made that assessment in an 88-page opinion she released Friday, just three days after she threw out the preliminary injunction. The $30 billion settlement.
The deal would have reduced and capped the swipe fees, also known as interchange fees, that are paid by more than 12 million merchants to process Visa and Mastercard transactions.
The judge called the estimated $6 billion in annual savings for merchants a “tiny” amount compared to the estimated $100 billion in fees they pay to Visa and Mastercard in 2023.
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A federal judge said Visa and Mastercard are likely to face a larger settlement than the proposed $30 billion settlement she rejected. (Jakub Porzycki/NurPhoto via Getty Images/File)
“Without evidence of Visa and Mastercard’s benefit, the court cannot say with certainty that the defendants can withstand a larger trial; however, the evidence strongly suggests that they can withstand a substantially larger trial,” he wrote Brodie.
| TICKER | Safety | The last | AmENdmENT | Change % |
|---|---|---|---|---|
| V | VISA INC. | 262.47 | -4.12 | -1.55% |
| me | MASTERCARD INC. | 441.16 | -1.59 | -0.36% |
The long-running antitrust lawsuit over swipe fees began in 2005 and could go to trial if card issuers and merchants are unable to agree on a new settlement that passes a judge’s review.
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The proposed solution would have easily reduced sliding fees for three years, capped fees for five years, and allowed merchants more leeway to impose additional fees. (Robert Nickelsberg/Getty Images/File)
“While we are disappointed with the judge’s decision, we continue to believe that a direct resolution with merchants is the best way forward and are evaluating all options as the case proceeds,” Visa told FOX Business in a statement.
“The US 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 US consumers and small businesses that powers our economy,” added Visa.
Mastercard did not immediately respond to a request for comment.
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Visa said it still believes a direct settlement between card issuers and merchants is the best outcome despite the judge rejecting a proposed settlement. (Andrew Harrer/Bloomberg via Getty Images/File)
In the wake of the decision, Mastercard previously expressed disappointment and said the settlement would encourage competition and give millions of businesses “essential security and great value in how they manage their card acceptance activities.”
Under the terms of the settlement rejected by the judge, card issuers would have dropped 1.5% to 3.5% slide fee at 0.04 percentage points for three years, the fees are capped for five years and gave merchants more room to set additional fees.
Brodie said the proposed changes did not achieve the “best possible” recovery because they kept fees far above where they would be without the alleged antitrust violations and still saddled merchants with the “Honor All Cards” rule. “, which requires them to accept all Visa and Mastercards or none.
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Many traders opposed the settlement, as did several trade groups, including here National Retail Federation.
Reuters contributed to this report.