The $30 billion deal between Visa and Mastercard to reduce credit and debit card costs for retailers is now in jeopardy. Judge Margo Brodie of New York hinted that she might reject the agreement. She informed the attorneys involved that she would “probably not approve the settlement” and intended to draft a decision-making opinion.
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Both companies expressed dissatisfaction. Visa viewed the settlement as an “acceptable end” to the long-running case, while Mastercard described it as a “fair resolution” that would give businesses more control over card transactions. Announced on March 26, the settlement aimed to resolve most claims in the nearly 19-year-old case, involving over 90% of small firms.
Visa and Mastercard have long faced criticism from businesses for their high swipe fees, which hinder them from directing customers to cheaper payment options. According to the Merchants Payments Coalition, scan fees exceeded $172 billion in 2023, more than doubling over the past decade.
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The settlement proposal aimed to reduce the average 1.5% to 3.5% swipe fee by at least 0.04 percentage points for three years. Additionally, Visa and Mastercard would remove anti-steering clauses and cap rates for five years. However, the National Retail Federation and other objectors deemed the settlement “manifestly insufficient,” arguing it would still allow Visa and Mastercard to control swipe fees and impose a broad ban on future merchant claims.
