The parties announced a preliminary settlement in March that would limit the interchange fees Visa and Mastercard, which control a combined 80 percent of the credit card network market, charge retailers who accept their card.
The credit card giants agreed to roll back so-called swipe fees by at least 4 basis points for at least three years and cap their fees at 2023 levels for the next five years.
The full order appears to be sealed, but according to the docket entry, “the Court finds that it is not likely to grant final approval to the Settlement and accordingly denies Plaintiffs’ motion for preliminary settlement approval.”
“As we noted earlier this month, we are disappointed by this development. 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,” Seth Eisen, senior vice president of communications at Mastercard, told The Hill.
Eisen also said Mastercard would pursue other options to resolve the long-standing legal matter.
A Visa spokesperson pointed The Hill to the company’s June 13 comment: “We continue to believe that the proposed settlement agreement was the appropriate resolution resulting from lengthy and thoughtful discussions with the merchant class.”
Retail industry groups slammed the proposed settlement in March over concerns that the deal provided only temporary relief to a systemic problem.
“Thankfully, the judge made the right call in recognizing what a bad deal this would have been for Main Street merchants and their customers. It’s extremely unusual for a judge to reject a settlement at the preliminary stage, so this shows how far Visa and Mastercard’s proposal missed the mark,” said Christopher Jones, chief government relations officer and counsel at the National Grocers Association and a member of the executive committee of the Merchants Payments Coalition (MPC).
Retailers pay an average 2.24 percent fee each time they swipe a credit card, according to the National Retail Federation (NRF), although those fees can be as high as 4 percent.
NRF, an MPC member, also says swipe fees tend to be the second largest operating cost for retailers, after labor.
“The credit card payment market has been broken for decades. Leading retailers are grateful that Judge Brodie saw through the façade of the proposed settlement and understood that it would not provide the meaningful change that is needed to correct the competitive imbalance in the interchange ecosystem,” said the Retail Industry Leaders Association.
The Hill’s Taylor Giorno has more here.
