A US district court judge has rejected an agreed $30 billion settlement over swipe fees between the two major card schemes and US merchants partially on the grounds that Visa and Mastercard have the financial armoury to pay "substantially" more.

After nearly 20 years of litigation, Visa and Mastercard in March reached a settlement with US merchants lowering and capping credit card interchange rates in a deal that could save the merchants $30 billion over five years.

The settlement, one of the largest in US antitrust history, sought to reduce credit interchange fees and then cap those rates into 2030.

Under the deal, merchants would also have been free to charge different prices to shoppers based on which credit cards they pay with.

The deal, which was still subject to court approval, has now been rejected by US District Judge Margo Brodie. In court filings unearthed by Bloomberg News, Brodie wrote that while the proposed settlement is $30 billion, “the estimated $6 billion in annual savings to merchants is paltry compared to the $100 billion that merchants paid in interchange fees on Visa and Mastercard transactions in 2023. Both companies could withstand a substantially greater judgment.”

In making the ruling Brodie also noted that the proposed deal was disportionately weighted in favour of large retailers over smaller, local merchant outlets.

Both Mastercard and Visa have expressed their disappointment with the decision. Visa stated its belief that "direct resolution with merchants is the best way forward".

In April, the National Retail Federation (NRF) asked the court to reject the proposed settlement, with the case now likely to proceed to trial.