Visa-Mastercard credit card fees settlement rejected
Add Axios as your preferred source to
see more of our stories on Google.
A credit card decal is displayed on the window of a business in San Rafael, Calif. Photo: Justin Sullivan/Getty Images
A federal judge on Tuesday denied a request from Visa and Mastercard to green-light a settlement that some merchants felt did not go far enough to provide them relief from credit card fees.
Why it matters: Merchants say credit card companies have too much power over transactions, charging an average of 1.5% to 3% in fees per credit card transaction, according to BankRate.com.
Driving the news: Judge Margo Brodie of New York issued an order saying she is "not likely to grant final approval" of the deal, which Visa and Mastercard had said would save U.S. businesses $29.8 billion over five years.
- Brodie gave the parties through the rest of the week to propose redactions to her ruling before it's unsealed.
Zoom in: U.S. merchants handed over $100.8 billion in credit card fees in 2023, up $7.5 billion from 2022, according to the Merchant Payments Coalition.
- Those fee rates would have fallen by at least 4/100ths of a percentage point for the next several years, plaintiffs' attorneys reported.
Yes, but: The Merchants Payment Coalition (MPC) assailed the deal reached in March.
- "We're glad to see the judge recognize how bad this settlement was," Doug Kantor, general counsel for the National Association of Convenience Stores and member of the MPC, tells Axios in an interview.
- "Visa and Mastercard fix prices and tie all the banks together into a giant pricing cartel — and the settlement didn't correct any of those problems."
The other side: "We are disappointed by this development," Mastercard said in a statement. "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."
- A Visa representative did not immediately respond to a request for comment.
What's next: Unless the credit card companies and merchants reach a new deal that wins the judge's approval — or an appellate court steps in they're headed toward a trial over the fate of their current fees.
Editor's note: This story was updated with a statement from Mastercard.
