Financial experts talk about “serious” consequences of retail credit cards.
A federal judge on Friday Card Issuers Visa and Mastercard She is likely to be able to withstand a “significantly larger” settlement with retailers who claim they overpaid swipe fees than the $30 billion settlement offer she rejected last week.
U.S. District Judge Margo Brody of the Eastern District of New York offered that assessment in an 88-page opinion released Friday, just three days after rejecting the preliminary ruling. $30 billion settlement.
The agreement lowered and capped the swipe fees, also known as interchange fees, paid by more than 12 million merchants to process Visa and Mastercard transactions.
The judge said the estimated $6 billion in annual savings for merchants was “insignificant” compared with the estimated $100 billion in fees they will pay to Visa and Mastercard in 2023.
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The federal judge said Visa and MasterCard would likely be able to withstand a larger settlement than the $30 billion settlement offer she rejected. (Jakub Porzycki/NurPhoto via Getty Images/File)
“Absent evidence regarding Visa and MasterCard’s profitability, the Court cannot determine with certainty that Defendants can withstand a larger judgment. However, the evidence strongly suggests that Defendants can withstand a significantly larger judgment,” Judge Brody wrote.
| Ticker | safety | last | change | change % |
|---|---|---|---|---|
| Five | Visa Inc. | 262.27 | -4.35 | -1.63% |
| Massachusetts | MasterCard Japan Co., Ltd. | 441.02 | -2.11 | -0.48% |
The long-running antitrust litigation over swipe fees began in 2005 and could go back to court if card issuers and merchants can’t agree on a new settlement that can pass a judge’s review.
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The proposed settlement would slightly reduce card-swipe fees over three years and cap fees for five years, giving retailers more leeway to charge surcharges. (Robert Nickelsburg/Getty Images/File)
“While we are disappointed with the judge’s decision, we believe a direct resolution with the retailers is our best option and are considering all options as the litigation progresses,” Visa said in a statement to Fox Business.
“The U.S. payments ecosystem is the most advanced in the world, and we are focused on maintaining the security, innovation, rewards and access to credit that are so important to American consumers. Small and medium-sized enterprises It’s what drives our economy,” Visa added.
Mastercard did not immediately respond to a request for comment.
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Visa said it believes a direct resolution between card issuers and merchants is still the best outcome, despite the judge rejecting the proposed settlement. (Andrew Haller/Bloomberg via Getty Images/File)
Mastercard had previously expressed disappointment following the ruling, saying the settlement should have promoted competition and given millions of businesses “greater certainty and greater value in how they manage their card-acceptance operations.”
Under the terms of the settlement rejected by the judge, card issuers would have reduced their fees to 3.5% from the usual 1.5%. Swipe Fees It raised the fee by 0.04 percentage points over three years and capped it for five years, giving retailers more leeway to charge extra.
Brody said the proposed changes would not result in the “best possible” recovery because they would keep fees significantly higher than they would be if there were no alleged antitrust violations and would “impose” an “all cards accepted” rule on merchants that would require them to either accept all Visa and MasterCard cards or none at all.
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Many merchants opposed the settlement, including National Retail Federation.
Reuters contributed to this report.
