Mark Lenihan/AP
FILE – MasterCard and Visa credit card logos are displayed at the entrance of a coffee shop in New York, April 22, 2005. (AP Photo/Mark Lennihan, File)
new york
CNN
—
The federal judge overseeing a tentative $30 billion card-swipe fee settlement between MasterCard, Visa and retailers formally rejected the settlement on Tuesday.
Two of the world’s largest credit card networks, MasterCard and Visa, in March finalized a multibillion-dollar antitrust settlement with U.S. retailers that would lower the swipe, or interchange, fees that retailers must pay when customers use their cards to make purchases.
Details of Tuesday’s ruling by U.S. District Judge Margo Brody of the Eastern District of New York were not made public, but a memo the court released on Tuesday said it was “unlikely to grant final approval” to the tentative settlement without changes.
Retailers are typically charged 2% of the total customer transaction amount as a swipe fee.However, it can be as high as 4% on some premium rewards cards.The proposed settlement would reduce those fees by at least 0.04% for at least three years, according to industry estimates.
The settlement, which is subject to final approval by the Eastern District of New York, is the result of a long-running antitrust class action lawsuit filed in 2005.
In their lawsuits, merchants alleged that card companies and card-issuing banks conspired to charge businesses exorbitant swipe fees and discourage them from using other, cheaper payment methods.
In the interim settlement, the card companies denied any wrongdoing and agreed to maintain their card-swipe fees as of Dec. 31, 2023, for five years.
Visa and Mastercard also agreed to remove anti-competitive restrictions that will allow retailers to offer other preferred card options to customers in the future.
This is a developing story and will be updated.
