NEW YORK, June 28 (Reuters) - A federal judge said Visa

and Mastercard ( MA ) can likely withstand a

"substantially greater" settlement with merchants who said they

overpaid on swipe fees than the $30 billion accord she rejected

this week.

U.S. District Judge Margo Brodie in Brooklyn made her

assessment in an 88-page opinion released on Friday, three days

after announcing her rejection of the preliminary settlement.

The accord covering more than 12 million merchants would

have lowered and capped swipe fees, also known as interchange

fees, they pay to handle Visa and Mastercard ( MA ) transactions.

But the judge called the estimated $6 billion of annual

savings for merchants "paltry" compared with the estimated $100

billion in fees they paid to accept Visa and Mastercard ( MA ) in 2023.

"Without evidence of Visa's and Mastercard's ( MA ) profitability,

the court cannot say with certainty that defendants can

withstand a greater judgment; however, the evidence strongly

suggests that they could withstand a substantially greater

judgment," Brodie wrote.

The antitrust litigation began in 2005, and could go to

trial absent a new settlement.

Visa said it was disappointed, and still believes that

"direct resolution with merchants is the best way forward."

Mastercard ( MA ) also expressed disappointment, saying the

settlement would have encouraged competition and given millions

of businesses "substantial certainty and enormous value in how

they manage their card acceptance activities."

The accord would have lowered the typical 1.5% to 3.5% swipe

fee by 0.04 percentage points for three years, capped fees for

five years, and given merchants more room to impose surcharges.

Brodie said the proposed changes fell short of "best

possible" recovery.

She said it kept fees significantly above where they would

be absent the alleged antitrust violations, and still "saddled"

merchants with the "Honor All Cards" rule requiring that they

accept all Visa and Mastercard ( MA ) cards, or none.

Many merchants objected to the settlement, as did several

trade groups including the National Retail Federation.

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.