On June 14, NACS Daily reported that U.S. District Judge Margo Brodie indicated she was unlikely to approve the $30 billion preliminary swipe-fees settlement proposed by Visa and Mastercard. On Tuesday, Brodie officially rejected the settlement, reported CNN.
“The ruling likely means the credit card processors will have to make more concessions to resolve their long-standing dispute with merchants,” CNN wrote.
According to Reuters, Brodie will issue a written opinion explaining her reasoning for the rejection after giving merchants and the card networks until June 28 to propose redactions.
"[The settlement] didn't address the problem of Visa, Mastercard and banks forming a cartel to issue credit cards and set fees, such that merchants have to accept all cards or none," Doug Kantor, general counsel of NACS, said in an interview with Reuters. “We’re gratified to see that the court recognized how bad this settlement was.”
Visa and Mastercard will have to either renegotiate the settlement with merchants or go to trial.
NACS has been aggressively pushing back on Visa and Mastercard’s claims that the settlement will help retailers—it may in fact prevent actual change from happening in the marketplace. It would lock-in the Visa/Mastercard system of setting banks’ swipe fees and prevent other lawsuits (like NACS’) from seeking real reforms.
Under the settlement’s proposed agreement, Visa and Mastercard would lower credit card swipe fees—which averaged 2.26% of the transaction amount in 2023—by at least four basis points for at least three years. But the settlement specifically allows Visa and Mastercard to increase the network fees they charge as much as they want at any time, wiping out any reduction in swipe fees.
The settlement similarly did not address the lack of competition in the marketplace and was not related to the Credit Card Competition Act. Bipartisan bills introduced in both the U.S. House and Senate would require the largest U.S. banks that issue Visa or Mastercard credit cards to allow transactions to be processed over at least two unaffiliated card payment networks—the same process that has been used for debit card transactions for more than a decade.
Visa and Mastercard credit card swipe fees alone totaled $100.77 billion in 2023, rising from $93.2 billion the year before and topping the $100 billion mark for the first time.
NACS members are encouraged to reach out to their members of Congress and ask that they support the Credit Card Competition Act. NACS makes it easy for retailers and suppliers to send a message to their legislators via the NACS Grassroots Portal.