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Report: Judge Expected to Reject Visa, Mastercard Swipe Fee Settlement

swipe fees, interchange fees, debit cards

Credit card swipe fee litigation that has been fought for two decades is reportedly likely to remain unresolved for some time longer.

A federal judge is likely to reject a $30 billion settlement between VisaMastercard and retailers that was announced in March but remains subject to court approval, Bloomberg reported Thursday (June 13).

During a Thursday hearing, Judge Margo Brodie of the U.S. District Court of the Eastern District of New York indicated that she probably won’t approve the deal, according to the report.

Brodie has not officially ruled but said she would issue a written decision within days, the report said.

“The court’s comments strongly suggest that she won’t accept the settlement,” Bloomberg Intelligence analyst Justin Teresi said in the report. “While Judge Brodie doesn’t seem convinced that larger retailers should be allowed to opt out from the settlement, provisions like changes to digital wallet acceptance rules and some state bans on surcharges likely present real adequacy issues.”

Spokespeople for both Visa and Mastercard told Bloomberg that they were “disappointed” by the developments and that they will continue to work to resolve the dispute.

At least one group representing merchants was pleased with the development. Doug Kantor, general counsel for the National Association of Convenience Stores, said: “We’re gratified to see that the court recognized how bad this settlement was,” per the report.

When Visa and Mastercard reached the class action settlement with U.S. merchants in March, they and the plaintiffs’ lawyers said that, subject to approval by the court, the deal would end years of litigation around swipe fees and restrictions placed on merchants.

They added that the settlement would lower credit card interchange fees, would cap those fees for five years, and would give merchants more choice in how they accept digital payments.

“It provides comprehensive market-based solutions to too-high swipe fees, while providing immediate fee relief to merchants as they make these new competitive tools work for them,” one of the merchants’ lawyers, Steve Shadowen of Hilliard Shadowen LLP, said in a March press release.

In April, the National Retail Federation (NRF) asked a federal judge to reject the proposed settlement, saying the deal was struck without the input of major retailers or trade associations and that it fails to address “anti-competitive practices.”