US federal judge rejects USD30B settlement offer from Visa, MasterCard
Date
6/30/2024 6:10:43 AM
(MENAFN) A U.S. federal judge has declined a proposed USD30 billion settlement from Visa and Mastercard, stating that the companies are capable of offering a much larger settlement amount. The proposed deal aimed to resolve an antitrust lawsuit involving more than 12 million merchants, focusing on reducing and capping swipe fees, also known as interchange fees, which merchants pay to process transactions with Visa and Mastercard.
Judge Brody expressed dissatisfaction with the settlement, citing that the estimated annual savings of USD6 billion for merchants were insignificant compared to the approximately USD100 billion in fees paid to Visa and Mastercard in 2023 alone. She remarked that while there was no conclusive evidence on the profitability extent of Visa and Mastercard, indications strongly suggested their capacity to sustain a substantially larger settlement.
The antitrust lawsuit, initiated in 2005, may now proceed to trial unless a revised settlement is reached. Both Visa and Mastercard expressed disappointment over the judge's decision. Visa emphasized its belief in negotiating directly with merchants for a resolution, while Mastercard highlighted the settlement's role in fostering competition and providing certainty to millions of businesses in managing card acceptance.
Under the proposed settlement, swipe fees would have seen a reduction of 0.4% over three years and been capped for five years, along with granting merchants more flexibility in charging additional fees. However, Judge Brody noted that these terms fell short of providing the optimal compensation and relief sought by the merchants involved in the litigation.
The rejection of the settlement underscores ongoing legal challenges and debates surrounding the financial practices and market dominance of Visa and Mastercard, with implications for future negotiations and regulatory oversight in the payment card industry.
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