A federal judge suggests Visa and Mastercard can afford higher settlements

U.S. District Judge Margo Brodie in Brooklyn rejected a tentative $30 billion settlement between Visa Inc. (VN) and Mastercard Inc. (MA.N) and merchants who claimed they were overcharged for swiping their cards. Judge Brodie’s decision, detailed in an 88-page opinion released Friday, suggests Visa and Mastercard likely would have withstood a much larger settlement than the one proposed.

Rejected agreement, announced three days before Brodie issued his opinion, which aimed to address the concerns of more than 12 million merchants by lowering and capping the interchange fees — commonly known as swipe fees — they pay to process transactions. But the judge criticized the proposed settlement, saying the estimated $6 billion in annual savings for merchants was insufficient compared to the $100 billion in fees they would pay in 2023 to accept Visa and Mastercard payments.

“Without evidence of the viability of Visa and Mastercard, the court cannot conclude with certainty that the defendants will withstand a more severe sentence; however, the evidence strongly suggests that they could withstand a much more severe sentence,” Judge Brodie wrote, emphasizing the need for a more substantive decision.

Related: Judge Throws Out Visa, Mastercard’s $30 Billion Swipe Fee Deal

The antitrust case, which began in 2005, could go to trial if a new settlement isn’t reached. In the long-running case, merchants and card issuers have clashed over fees charged for processing credit and debit card transactions.

Both Visa and Mastercard expressed disappointment in the judge’s decision. Visa reiterated that it believes a direct solution with merchants is the best way forward, while Mastercard noted that a settlement would promote competition and provide millions of businesses with “significant certainty and enormous value in how they manage their card acceptance businesses.” .

Source: Reuters