Judge Rejects $30 Billion Visa & Mastercard Antitrust Settlement with Retailers

A federal judge has dismissed a proposed $30 billion antitrust settlement between Visa, Mastercard, and a select group of retailers, a deal criticized by the broader retail industry.

Visa and Mastercard, which together control approximately 80% of the credit card network market, had agreed in March to limit interchange fees, also known as swipe fees, charged to retailers accepting their cards. This preliminary agreement, pending judicial approval, would have required the credit card companies to reduce swipe fees by at least 4 basis points for three years and cap their fees at 2023 levels for the next five years.

Despite the order being sealed, the court docket reveals that the judge found the settlement unlikely to receive final approval and therefore denied the motion for preliminary approval.

"We are disappointed by this development. We believed the settlement offered a fair resolution to this long-standing dispute, giving business owners more flexibility in managing card acceptance," said Seth Eisen, Mastercard's senior vice president of communications, in a statement to The Hill. Eisen added that Mastercard would explore other options to resolve the issue.

Visa did not immediately respond to requests for comment.

Retail industry groups criticized the proposed settlement in March, arguing that it offered only temporary relief to a persistent problem.

"Thankfully, the judge recognized what a bad deal this would have been for Main Street merchants and their customers. It’s rare for a judge to reject a settlement at the preliminary stage, which shows how far off the mark Visa and Mastercard’s proposal was," commented Christopher Jones, chief government relations officer and counsel at the National Grocers Association and member of the Merchants Payments Coalition (MPC) executive committee.

Retailers, on average, pay a 2.24% fee each time a credit card is swiped, with some fees reaching up to 4%, according to the National Retail Federation, an MPC member. Swipe fees are typically the second-largest operating cost for retailers after labor.

"The credit card payment market has been broken for decades. Leading retailers appreciate that Judge Brodie saw through the proposed settlement and recognized it would not bring the meaningful change needed to correct the competitive imbalance in the interchange ecosystem," stated the Retail Industry Leaders Association.

Retailers are urging Congress to pass the Credit Card Competition Act, a controversial bill sponsored by Senators Dick Durbin (D-Ill.) and Roger Marshall (R-Kan.), which the credit card industry has strongly opposed. This bill would mandate financial institutions with over $100 billion in assets to provide at least two network options, with at least one not being Visa or Mastercard, for processing credit card transactions.

Critics argue that the bill would benefit large retailers, jeopardize card security, and eliminate popular rewards programs. However, supporters believe the bill would introduce necessary competition to challenge the Visa-Mastercard duopoly.

"True relief and a fix to the broken payments market can only come from Congress passing the Credit Card Competition Act," Jones stated.

A Visa spokesperson referred The Hill to the company's previous comment from June 13: "We continue to believe that the proposed settlement agreement was the appropriate resolution following extensive and thoughtful discussions with the merchant class."

Why This Matters: The rejection of the settlement highlights ongoing tensions between credit card giants and the retail industry over interchange fees. The decision underscores the need for comprehensive legislative action to address competitive imbalances in the payment processing market.

Key Takeaways

• A judge dismissed a $30 billion antitrust settlement between Visa, Mastercard, and a select group of retailers.
• The settlement would have limited swipe fees for three years and capped fees at 2023 levels for five years.
• Retailers argued the deal offered only temporary relief and failed to address systemic issues.
• The Credit Card Competition Act is being pushed by retailers to introduce more competition.
• Critics of the bill argue it could compromise card security and eliminate rewards programs.