BROOKLYN, N.Y.—The Eastern District Court of New York has rejected the $30-billion settlement between merchants and Visa and Mastercard that would have capped the fees the two card companies charge merchants, otherwise known as swipe fees.
The result is a new monkey wrench in what is now a two-decade-long lawsuit that was originally filed in 2005. As CUToday.info reported here, when the $30 billion settlement was announced in March it was supposed to cap credit card interchange fees into 2029 and was also to include an interchange rate reduction lasting for a period of at least three years.
But U.S. District Judge Margo Brodie said in a memo that she is “not likely” to grant approval to the final settlement and rejected a request for preliminary settlement approval. Brodie has ordered the plaintiffs to confer and respond to the ruling by Friday.
The judge’s decision means either Visa and Mastercard will have to renegotiate the settlement or go to trial.
America’s Credit Unions’ Response
In response to the judge’s decision, America’s Credit Unions issued a statement saying it had “several concerns with the proposed settlement as announced in March, including reduction in the interchange rate paid by merchants, and will continue to monitor the latest legal developments and what they mean for credit unions.”