Visa, Mastercard's proposed antitrust settlement to be declined

Following Visa and Mastercard’s announcement regarding their legal settlement with US merchants, which aimed to decrease and limit their credit card interchange rates, from March 2024, a New York judge told the card networks’ lawyers and objectors that they are likely to not approve the settlement. According to Reuters, the judge plans to write an opinion describing her decision and reasoning. Also, objectors included the National Retail Federation, one of the largest retailer trade groups, which mentioned that the settlement was insufficient and its benefits only temporary. In addition, the objectors underlined that Visa and Mastercard would still be able to dictate interchange fees and impose bans on future claims by merchants.

After receiving the news regarding the judge’s possible decision, both Mastercard and Visa mentioned their disappointment, with the former stating that the settlement was a fair resolution that could provide businesses with more flexibility in handling card transactions.

The lawsuit is entitled ‘In re Payment Card Interchange Fee and Merchant Discount Antitrust Litigation’ and it is managed by the US District Court, Eastern District of New York.

Back in March, Visa and Mastercard stated that the deal was set to minimise and cap the fees charged by them, allowing small and medium-sized enterprises (SMEs) to cooperatively negotiate rates with the payment processor similarly to how large merchants do on their own. At that time, the deal was agreed by the card networks and a court-appointed class counsel and intended to provide merchants with clarification on multiple areas regarding their acceptance of payment cards. In addition, the settlement was subject to final approval by the Eastern District Court of New York and, upon receiving the consent of the class settlement by the court, Mastercard aimed to have solved the majority of its pending US merchant litigations that needed changes to the company’s interchange infrastructure and acceptance rules.

Furthermore, businesses criticised Visa and Mastercard due to them charging swipe fees for processing credit and debit card payments, as well as for stopping them from pointing customers towards more cost-effective payment methods. In 2023 alone, interchange fees accounted for USD 172 million, nearly doubling in the last decade, as per the information provided by the Merchants Payments Coalition, which represents retailers, grocers, convenience stores, and gas stations.

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