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Federal Judge Strikes Down $30 Billion Visa and Mastercard Settlement Over Swipe Fees

In a surprising turn of events, a federal judge has rejected a $30 billion antitrust settlement previously agreed upon between credit card giants Visa, Mastercard, and a small group of retailers. The decision comes as a significant setback for the two companies, which collectively control 80% of the credit card network market.

Background of the Settlement

Visa and Mastercard had reached a preliminary agreement in March to reduce the interchange fees—commonly known as swipe fees—that they charge retailers for accepting their cards. The proposal included reducing these fees by at least 4 basis points for three years and capping fees at 2023 levels for the next five years. However, this settlement required judicial approval to move forward.

Judicial Rejection

The full details of the judge’s order are under seal, but the docket entry reveals that the court found it unlikely to grant final approval to the settlement, leading to the rejection at the preliminary stage. This decision underscores the judge’s concerns about the sufficiency and permanence of the proposed changes in addressing underlying issues within the credit card payment market.

Industry Reactions

The rejection has elicited strong reactions from various stakeholders. Seth Eisen, Senior Vice President of Communications at Mastercard, expressed disappointment, stating that the settlement was a fair resolution to a long-standing dispute and would have provided business owners more flexibility in managing card acceptance activities. Despite the setback, Mastercard plans to explore other options to resolve the issue.

Conversely, retail industry groups, who had criticized the settlement in March, welcomed the judge’s decision. They argued that the agreement offered only temporary relief without addressing the systemic issues plaguing the market. Christopher Jones, Chief Government Relations Officer at the National Grocers Association and a member of the Merchants Payments Coalition, praised the decision as a victory for Main Street merchants and their customers, highlighting its rarity and significance.

Financial Impact on Retailers

Retailers have long contended with the high costs associated with credit card swipe fees, which average 2.24% per transaction and can go as high as 4%. These fees represent one of the largest operating expenses for retailers, second only to labor costs. The National Retail Federation has pointed out that swipe fees impose a significant burden on retailers, affecting their overall competitiveness and pricing strategies.

The Path Forward

The ruling has reignited discussions about the need for legislative action to address competitiveness in the credit card market. Retailers have rallied support for the Credit Card Competition Act, sponsored by Senators Dick Durbin (D-Ill.) and Roger Marshall (R-Kan.), which seeks to dilute the dominance of Visa and Mastercard by requiring financial institutions with assets over $100 billion to offer at least two network options for processing transactions, including one that is not affiliated with the two credit card giants.

While the credit card industry opposes the bill, citing concerns over security and the potential loss of popular rewards programs, supporters argue that it is necessary to introduce competition and correct the competitive imbalances in the interchange ecosystem.


The federal judge’s decision to reject the $30 billion settlement marks a critical moment in the ongoing debate over fair credit card practices and the power dynamics within the financial industry. As the dialogue shifts back to legislative action, stakeholders from all sides continue to weigh the potential impacts on businesses, consumers, and the overall health of the financial market. The upcoming months will likely see intensified advocacy efforts as each party seeks to shape the outcomes in their favor.