A US judge has rejected a $30 billion settlement between Visa, Mastercard and retailers over credit card interchange fees.
Having already indicated that she was unlikely to sign off on the settlement, US District Judge Margo Brodie has now issued an order stating “the court finds that it is not likely to grant final approval to the settlement and accordingly denies plaintiff’s motion for preliminary settlement approval”.
The decision means that two decades of litigation between the card giants and merchants is still not at an end.
In March, Visa and Mastercard reached a settlement with some, mainly small, US merchants lowering and capping credit card interchange rates in a deal that could have saved the merchants $30 billion over five years.
The settlement would have reduced credit interchange fees and then cap those rates into 2030. Under the deal, merchants would also have been free to charge different prices to shoppers based on which credit cards they pay with.
However, several trade groups opposed it, saying that fees would remain too high and that Visa and Mastercard would have too much control over how card transactions are handled.
Merchant Payments Coalition executive committee member Christopher Jones says: "Thankfully, the judge made the right call in recognising what a bad deal this would have been for Main Street merchants and their customers."
Mastercard says it 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.”
Brodie will issue a written opinion explaining her reasoning after merchants, Visa and Mastercard get the chance to propose redactions.
The parties may now negotiate a new settlement or the case could go to trial.