Nothing’s settled, it seems — except that the $30 billion so-called “swipe fee” settlement is, at least in this incarnation, seemingly dead and gone. And what comes next is almost certain to be more legal wrangling. On Tuesday (June 25), U.S. District Judge Margo Brodie — having set expectations during a hearing earlier this month […]
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Nothing’s settled, it seems — except that the $30 billion so-called “swipe fee” settlement is, at least in this incarnation, seemingly dead and gone.
And what comes next is almost certain to be more legal wrangling.
On Tuesday (June 25), U.S. District Judge Margo Brodie — having set expectations during a hearing earlier this month that she would do so — formally rejected the $30 billion settlement between Visa, Mastercard and merchants that would have set limits on those fees, levied each time a credit card is used.
Brodie, chief judge in the Eastern District of New York, had said that she was “unlikely” to approve the settlement, which had been a possible culmination of roughly 20 years of suits and countersuits and for which plaintiffs (which included several groups of retailers) had moved for preliminary settlement approval.
As detailed here, Brodie had said during a hearing that the deal was unlikely to be approved; upon its formal rejection Tuesday she ordered the payments networks and the merchants to respond to the ruling by June 28. The June 25 ruling had not been made public at this writing.
PYMNTS has reached out to the payments network for comments. Visa had not responded as of publication time. In a statement provided to us by Mastercard, a spokesperson said the firm is “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. We will pursue our options to ensure a proper resolution of this matter.”
The terms of the settlement, reached in March, would have dictated that the interchange rates would have been lowered, and capped, toward the end of this year or into early 2025. And merchants would have been able to steer their customers to that enterprise’s preferred payment methods, with additional leeway to pass along a surcharge on purchases made with certain credit cards.
Merchants’ groups had estimated that the actions would save about $30 billion over about five years (hence the widely used “settlement” moniker), as interchange fees would have slid 0.04% for three years, and would be 0.07% below an average rate for a half-decade.
There is, we note, the possibility of a new settlement, or a trial. No matter the direction — lengthy settlement talks may lead to the courtroom and a trial, a lengthy trial may give way to a settlement — the economics of the swipe fees, on all sides of the equation, will continue to be hotly debated.
The post As Judge Nixes $30 Billion Swipe Fee Settlement, What Comes Next? appeared first on PYMNTS.com.
