There is a possibility that Visa (NYSE:V) and Mastercard’s (NYSE:MA) proposed $30 billion antitrust settlement could be in peril, according to a Reuters report. The report stated that a U.S. District Judge, Margo Brodie in Brooklyn, told lawyers she would “likely not approve the settlement.”
Following the news, Mastercard termed the settlement a “fair resolution” providing businesses more flexibility, while Visa called it an “appropriate resolution” to the 19-year-old case.
What Is the Visa and MA Antitrust Suit All About?
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, preventing businesses from steering customers toward cheaper payment options. According to a Reuters report, citing data from the Merchants Payments Coalition, swipe fees totaled $172 billion last year.
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, and accused these companies and their member banks of violating antitrust laws.
Visa and Mastercard Settle the Lawsuit
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 payments 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 18% from current levels.
