The settlement was intended to resolve an antitrust case over excessive credit card fees.
The decision marks a significant setback for giants Mastercard and Visa, who must now reconsider the settlement to resolve their longstanding disputes with U.S. retailers. The proposed settlement aimed to reduce the interchange fees that retailers pay when customers use credit cards for purchases.
Although the exact details of Tuesday’s decision were not made public, a court memorandum suggested that Judge Brodie was unwilling to approve the preliminary settlement without significant changes. This indicates that the credit card processors will likely need to make new concessions in order to reach an agreement with the affected retailers.

Retailers frequently pay around 2% of the total transaction value in interchange fees, which can reach up to 4% for certain premium reward cards, according to industry estimates. The proposed settlement would have reduced these fees by at least 0.04 percentage points over a minimum period of three years.
The preliminary settlement, which was awaiting final approval from the U.S. District Court for the Eastern District of New York, stemmed from a class-action lawsuit filed in 2005. In this lawsuit, retailers alleged that credit card companies and issuing banks conspired to artificially inflate interchange fees and prevent them from steering customers toward lower-cost payment methods.
Under the terms of the preliminary settlement, the card companies denied any wrongdoing and agreed to maintain the existing fees until December 31, 2023, for a period of five years. Additionally, Visa and Mastercard committed to removing anti-competitive restrictions, allowing retailers to suggest other preferred card options to customers in the future.
On one hand, the proposed settlement would have allowed retailers to impose surcharges on customers depending on the type of Visa or Mastercard used. These surcharges would likely affect cardholders who receive rewards like cashback and airline miles, as these cards typically carry higher fees.
More than 90% of the retailers who agreed to the preliminary settlement with Visa and Mastercard were small businesses, according to information from Visa. However, the National Federation of Independent Business (NFIB) considered this a “temporary relief” for small businesses rather than a long-term solution, as stated by Jeff Brabant, Vice President of Federal Affairs at the NFIB, in a statement to CNN International.
On the other hand, trade groups representing large retailers were more critical. The Merchants Payments Coalition (MPC), whose members include supermarkets, retail chains, restaurants, pharmacies, convenience stores, gas stations, and online merchants aiming for a reform of the payment system, viewed the preliminary settlement as insufficient.
Christopher Jones, a member of the executive committee of the Merchants Payments Coalition (MPC), criticized the proposed settlement, stating that it would have allowed the credit card companies to “maintain price-fixing and block competition.”
“Fortunately, the judge made the right decision by recognizing that this would have been a bad deal for Main Street merchants and their customers,” Jones said in a statement on Tuesday.
The Retail Industry Leaders Association (RILA), which represents a wide range of large retailers like Target, CVS, and Dollar General, also welcomed Tuesday’s decision.
“The big retailers are grateful that Judge Brodie looked beyond the surface of the proposed settlement and recognized that it would not bring the significant changes needed to correct the competitive imbalance in the interchange ecosystem,” RILA said in a statement.
A Mastercard spokesperson expressed disappointment with the decision. “We believe the settlement represented a fair resolution to this long-standing dispute, especially by giving business owners more flexibility in how they manage card acceptance. We will review our options to ensure a fair resolution of this matter,” the spokesperson said.
Glenn Licht, owner of Pescatore Seafood Company in New York, was anxiously awaiting the final decision on the settlement. Like many other merchants, Licht hoped the resolution would bring a reduction in interchange fees and a greater ability to steer their customers toward lower-cost payment methods.
Licht’s company operates two seafood stores in the iconic Grand Central Terminal Market in New York City. One shop sells seafood for takeout, while the other specializes in sushi for takeout.
Before the COVID-19 pandemic, Licht said that 80% of the transactions in his stores were cash, and 20% were credit card payments. “That has completely flipped. Now it’s at least 80% credit cards, and the rest is cash,” he said. With this change, the significant burden of interchange fees has become a larger concern, as these added costs can erode profitability.
“As a small retailer, you really feel the impact of this,” Licht said. Besides his two seafood stores, the company also operates an online seafood business. “We ship seafood across the country. That business, however, is 100% credit card transactions,” Licht explained.
Licht noted that he never believed the $30 billion settlement would “reach him as a small retailer in a way that would have made a big difference.” “I don’t think the decision will significantly affect our financial reports,” he concluded.
The implications of the proposed settlement and its rejection highlight the complexity of issues surrounding interchange fees and credit card acceptance, particularly for small retailers increasingly reliant on electronic transactions. The search for a fair and effective solution remains a priority for all parties involved.
Judge Margo Brodie’s rejection of the $30 billion settlement between Visa, Mastercard, and retailers underscores the complexity and significance of disputes over interchange fees and credit card acceptance. Small retailers like Glenn Licht face significant challenges due to the dominance of credit card transactions, and the search for solutions that balance the interests of retailers and credit card companies continues.
As Mastercard and Visa weigh their next steps to ensure a fair resolution, both large and small retailers remain eager for future negotiations and court decisions that could directly impact their businesses and profitability. The situation underscores the need for continued reforms in the payment system that offer more fairness and competitiveness, benefiting both merchants and consumers.
Judge Brodie’s decision marks a crucial step in this process, emphasizing that proposed solutions must bring significant and long-lasting changes to correct the competitive imbalance in the interchange ecosystem.