U.S. District Judge Margo Brodie in Brooklyn has rejected a $30 billion antitrust settlement between Visa (NYSE:V) and Mastercard (NYSE:MA). Some days ago, it was widely speculated that this settlement could be in peril.
The judge did not grant the final approval to the settlement and thus denied the request by a group of merchants, primarily small businesses, for preliminary approval.
Many merchant groups, like the National Retail Federation, had opposed the settlement, arguing that card fees remained too high as these two payment processing companies retained too much control. The judge’s decision may force Visa and Mastercard to negotiate a better settlement for merchants or go to trial. Brodie will issue a written opinion explaining her decision after allowing merchants and the card networks to propose redactions until June 28.
Details on the Visa and MA Antitrust Lawsuit
Many merchants, primarily small businesses, have long complained about Visa and Mastercard’s high swipe or interchange fees for processing credit and debit card payments, which prevent businesses from steering customers toward cheaper payment options.
As a result, back in 2005, a group of 19 merchants filed a lawsuit alleging that they paid excessive fees to accept Visa and Mastercard’s credit cards, accusing these companies and their member banks of violating antitrust laws.
Earlier this year, Visa and Mastercard announced a settlement worth $30 billion with U.S. merchants that aimed to end around two decades of litigation over credit and debit card fees.
The settlement reached between the payment processing companies and the U.S. businesses would result in the average swipe fee of 1.5% to 3.5% falling by at least 0.04 percentage points for three years. Visa and Mastercard agreed that the lowered fees would be in effect for three to five years and would allow businesses to steer customers toward cheaper payment options.
Is MA a Good Stock to Buy Now?
Analysts remain bullish about MA stock, with a Strong Buy consensus rating based on 23 Buys and one Hold. Over the past year, MA stock has increased by more than 15%, and the average MA price target of $525.25 implies an upside potential of 15.3% from current levels.
