Federal Judge Margo K. Brodie said on Thursday that she will “likely not approve” a landmark settlement over swipe fees between merchants and card giants Visa and Mastercard, according to court records. The judge’s impending decision imperils the $29.79 billion settlement reached in March after nearly two decades of litigation from merchants.

The judge’s likely rejection comes as a victory to trade groups like the National Retail Federation, which objected to the deal in April, calling the benefits to merchants “meager and temporary.”

Another trade group, the Merchants Payments Coalition, quickly voiced support for the settlement’s rejection on Thursday. “The judge made a strong statement in support of justice for merchants and consumers,” MPC executive committee member Christopher Jones said in a press release. “This proposed settlement would have done nothing to address the problem of how Visa and Mastercard centrally price fix swipe fees.” 

The settlement had both positive and negative implications for both Visa and Mastercard, Baird Senior Research Analyst David Koning said in a Friday note to investors. On the plus side, the uncertainty of two decades of litigation would have been over, and merchants would have been “less likely to push for other payment options” thanks to lower interchange rates laid out in the settlement, he said. However, lower interchange fees could mean lower revenue for banks, who in turn could try to pay the card giants less, according to Koning.

The court records did not say why the judge was leaning towards not approving the settlement; however they did indicate that she would provide a written decision.

Visa and Mastercard did not immediately respond to requests for comment on the judge’s indication that she would likely reject the settlement.


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