A United States federal judge has rejected a proposed $30 billion settlement between credit card giants Visa and Mastercard and a coalition of US retailers, casting uncertainty over efforts to resolve a long-standing legal battle over credit card swipe fees.
The agreement, originally announced in March, aimed to reduce the interchange fees merchants pay on credit card transactions.
However, U.S. District Judge Margo Brodie of the Eastern District of New York signaled Tuesday that she is “not likely to grant final approval” to the deal unless revisions are made.
While the full ruling remains under seal, a court memo outlined the judge’s preliminary stance.
The proposed settlement stemmed from a 2005 antitrust class-action lawsuit brought by merchants who accused Visa, Mastercard, and partner banks of colluding to keep swipe fees artificially high and limiting their ability to steer customers toward lower-cost payment methods.
Under the terms of the preliminary deal, Visa and Mastercard did not admit any wrongdoing. The companies agreed to cap swipe fee rates at their December 31, 2023 levels for five years and remove certain rules that restricted merchants from promoting cheaper payment options.
Additionally, the settlement would have permitted businesses to impose surcharges based on the type of Visa or Mastercard used—potentially affecting customers using high-reward credit cards that often carry elevated transaction fees.
Despite these concessions, the deal drew criticism from several merchant groups. The National Federation of Independent Business called the agreement only “temporary relief” for small businesses rather than a lasting solution, according to Jeff Brabant, the group’s vice president of federal government relations.
The Merchants Payments Coalition—which includes a wide array of retailers such as supermarkets, restaurants, gas stations, and online sellers—condemned the proposed settlement as insufficient.
Christopher Jones, an executive committee member of the coalition, argued that the deal would have allowed credit card firms to “keep price-fixing swipe fees and blocking competition.”
“Thankfully, the judge made the right call in recognizing what a bad deal this would have been for Main Street merchants and their customers,” Jones said in a statement to CNN.
Mastercard responded to the ruling with disappointment. In an email statement, a company spokesperson said, “We believe the settlement presented a fair resolution of this long-standing dispute, most notably by giving business owners more flexibility in how they manage their card acceptance activities. We will pursue our options to ensure a proper resolution of this matter.”
Visa has not yet commented on the court’s decision.
