NEW YORK, June 25 (Reuters) -

A U.S. judge on Tuesday rejected a $30 billion antitrust

settlement in which Visa and Mastercard ( MA ) agreed to

limit fees they charge merchants who accept their credit and

debit cards.

U.S. District Judge Margo Brodie in Brooklyn concluded that

she was not likely to grant final approval to the settlement,

and therefore denied the plaintiffs' request for preliminary

approval.

Her decision could force Visa and Mastercard ( MA ) to

negotiate a settlement more favorable to merchants, or go to

trial.

The

settlement announced in March

was intended to resolve most litigation that began in 2005

over so-called swipe fees, also known as interchange fees, that

merchants pay to accept Visa and Mastercard ( MA ), and which the card

networks set.

Those fees totaled about $72 billion in 2023, according

to the Nilson Report. They generate profits for bank and other

card issuers, which funnel many of the fees into rewards

programs that encourage consumers to spend more.

Many merchants and retail trade groups viewed the fees,

typically 1.5% to 3.5%, as excessive.

They also objected to rules forbidding merchants from

telling customers why some cards cost more than others, and

steering them toward cheaper cards.

Critics also say the fees lead to higher prices for

consumers, who are now sometimes charged less for using cash.

The settlement called for the average swipe fee to fall

at least 0.04 percentage points for three years, and stay at

least 0.07 percentage points below the current average for five

years.

Visa and Mastercard ( MA ) also agreed to cap rates for five

years and remove anti-steering provisions, while merchants got

more discretion to offer discounts or impose surcharges.

Several trade groups, including the National Retail

Federation, objected to the settlement.

They said the relief for merchants was small and

temporary, and made it difficult for them to mount future legal

challenges, while still letting Visa and Mastercard ( MA ) dictate

swipe fees.

Some U.S. senators have promoted legislation, the Credit

Card Competition Act, to let merchants use other payment

networks to process Visa and Mastercard ( MA ) transactions.

The rejection does not affect a separate

$5.6 billion class action swipe fee settlement

among Visa, Mastercard ( MA ) and about 12 million merchants.

A federal appeals court in Manhattan upheld that accord

in March 2023, seven years after

throwing out

a $7.25 billion settlement that short-changed some

retailers.

The case is In re Payment Card Interchange Fee and

Merchant Discount Antitrust Litigation, U.S. District Court,

Eastern District of New York, No 05-md-01720.