Federal judge rejects $30 billion settlement between Visa, Mastercard and retailers

A federal judge overseeing a $30 billion preliminary swipe-fees settlement between Mastercard, Visa and retailers formally rejected the deal Tuesday.

A federal judge overseeing a $30 billion preliminary swipe-fees settlement between Mastercard, Visa and retailers formally rejected the deal Tuesday. Mastercard and Visa, two of the world’s largest credit card networks, reached their proposed multi-billion antitrust settlement with US merchants in March. The settlement would lower swipe fees, or interchange fees, that a retailer must pay when a customer makes a purchase using their card. The details of Tuesday’s ruling made by Judge Margo Brodie of the US District Court of the Eastern District of New York have not been made public. But a memo released by the court on Tuesday said that she was “not likely to grant final approval” to the preliminary settlement absent any changes. Retailers typically are charged 2% of the total customer transaction in swipe fees — but they can be as much as 4% for some premium rewards cards, according to industry estimates. The proposed settlement would have lowered those fees by at least 0.04% percentage points for a minimum of three years. The proposed settlement, which hinged on final approval from the Eastern District of New York, resulted from a longstanding antitrust class-action lawsuit in 2005. In the suit, merchants alleged that the card companies and the banks that issue cards with them colluded to charge businesses inflated swipe fees and prevented them from directing their customers to other, cheaper payment options.