Visa and Mastercard face potential defeat after New York judge finds disapproval of proposed $30 billion antitrust settlement – Mastercard (NYSE:MA), Visa (NYSE:V)

Proposed by: $30 billion antitrust settlement Visa Inc. V AND Mastercard Inc. MOM faces potential defeat as a New York judge has indicated she may not approve the agreement.

What happened: United States District Judge Margo Brodie, signaled during Thursday’s hearing that she would likely reject the proposed settlement, Reuters reported. The settlement announced on March 26 was intended to resolve most of the claims in a nationwide lawsuit that began in 2005.

The settlement aimed to limit fees for credit and debit card merchants, with small businesses making up more than 90% of billing merchants. But critics say the proposed settlement provides little or no benefit to traders.

Visa and Mastercard expressed disappointment with the judge’s stance. Mastercard described the settlement as a “fair solution” that will give companies greater flexibility in managing card transactions. Meanwhile, Visa called it an “appropriate resolution” to the nearly two-decade-old case.

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Opponents of the settlement, including the National Retail Federation, the world’s largest retail trade group, criticized it as “manifestly insufficient” and offering “modest and temporary” benefits.

Why is this important?: The proposed settlements come amid increased scrutiny of Visa and Mastercard’s fee practices. Both companies were under investigation in the UK in May over fee increases without accompanying service improvements. The investigation was launched by the UK’s Payment Systems Regulator, which raised concerns about a lack of competition in the market.

However, in March, Visa and Mastercard reached a landmark antitrust class action settlement with U.S. merchants. This settlement, subject to approval by the United States District Court for the Eastern District of New York, sought to resolve injunctive claims in the “Payment Card Interchange Fee and Merchant Discount Antitrust Action.”

Following this agreement, Mastercard announced a fee increase in April, resulting in millions of dollars in costs for retailers. The network’s “rating” fee was to increase to 0.14% from 0.13%, resulting in additional fees of $259.1 million based on prior year transactions of more than $2 trillion.

Despite these changes, analysts remained optimistic about the future of Visa and Mastercard. Piper Sandler began reporting in May and mentioned its strong position in the global payments market and the potential for sustainable growth.

Reduction: On Thursday, Visa Inc closed at $271.19, up 0.32% on the day, and after-hours trading closed at $271.50, up 0.11%. Since the beginning of the year, Visa shares have increased by 4.76%. Meanwhile, on the same day, Mastercard Inc reached USD 445.00, up 0.45%. Mastercard shares are up 5.48% since the beginning of the year, according to Benzinga Pro.

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This story was generated by Benzinga Neuro and edited by Kaustubh Bagalkote