The settlement aimed to temporarily reduce and cap credit interchange rates through 2030.

The district judge of the US District Court for the Eastern District of New York, Margo Brodie, issued an order stating that the court finds it unlikely to grant final approval to the settlement. It was argued the deal unfairly favoured small merchants over larger ones.

Consequently, the plaintiff’s motion for preliminary settlement approval was denied.

In court filings, the Judge wrote that “the estimated $6bn in annual savings to merchants is paltry compared to the $100bn that merchants paid in interchange fees on Visa and Mastercard transactions in 2023”, adding that the payment service giants could “withstand a substantially greater judgment”, Bloomberg News reports.

The rejected settlement would have allowed retailers to charge extra for Visa or Mastercard transactions and steer consumers towards cheaper cards. Now the involved parties should negotiate a better settlement or proceed to trial.