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A rare $500 banknote from the 1930s is to be put up for sale by a Derbyshire-based auctioneer. (Credit: Henson’s Auctions via Storyful)
A federal judge said Friday Card issuers Visa and MasterCard could potentially face a “significantly higher” settlement with merchants who argued they paid more swipe fees than the proposed $30 billion settlement rejected last week.
U.S. District Judge Margo Brody of the Eastern District of New York made that assessment in an 88-page opinion she issued Friday, just three days after denying the primary. $30 billion settlement.
The agreement will lower and limit the swipe fees, also known as interchange fees, paid by more than 12 million merchants to handle Visa and MasterCard transactions.
The judge called the estimated $6 billion in annual savings for merchants a “significant” amount compared to the estimated $100 billion in fees paid to Visa and MasterCard by 2023.
“Without evidence of Visa and MasterCard’s profitability, the Court cannot say with certainty that the defendants could face a large judgment; however, the evidence strongly suggests that they could face a substantially larger judgment,” Brody wrote.
A long-running antitrust lawsuit surrounding swipe fees began in 2005 and could go to trial if card issuers and merchants don’t agree on a new settlement that passes a judge’s review.
“While we are disappointed with the judge’s decision, we continue to believe that a direct resolution with merchants is the best way forward and are evaluating all options as the case progresses,” Visa said in a statement to FOX Business.
“The US payments ecosystem is one of the most advanced in the world, and we are focused on maintaining the security, innovation, rewards and access to credit that are important to American consumers and Small businesses which powers our economy,” Visa added.
MasterCard did not immediately respond to a request for comment.
The MasterCard and Visa logos are pictured on credit cards in New York, Wednesday, Aug. 31, 2005. (Photo by Daniel Acker/Bloomberg via Getty Images)
In the wake of the ruling, MasterCard previously expressed disappointment, saying the settlement would promote competition and give millions of businesses “significant certainty and tremendous value in how they manage their card acceptance activities.”
Under the terms of the settlement rejected by the judge, card issuers would have reduced the usual 1.5% to 3.5%. Swipe Fee 0.04 percentage points for three years, capped fees for five years and gave merchants more room to impose surcharges.
Brody said the proposed changes fell short of the “best possible” recovery because they kept fees significantly above where they would be without the alleged antitrust violations and still “saddled” merchants with the “honor all cards” rule, for which he All need to be accepted. Visa and MasterCard cards or none.
Many merchants objected to the settlement, as did some trade groups National Retail Federation.
Reuters contributed to this report.
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