The card brands are scrambling to come up with a solution to their
"We're disappointed with where this is landing," said Mastercard CEO Michael Miebach during Wednesday's earnings call. "We respectfully disagree with the ruling."
That agreement, which would have ended the dispute, called for the card networks to reduce posted fees by four basis points for at least three years, with a reduction of at least seven basis points below December 31, 2023 levels for at least five years. Merchants would also have more flexibility to push consumers toward certain cards, a practice called tender steering. Some merchant groups such as the National Grocers Association and Merchant Payments Coalition disputed the settlement, saying it would provide temporary relief.
"This has been negotiated for many years with a number of parties and would have produced a lot of benefits," Miebach said. "But that is not happening."
The fee battle overshadowed an otherwise strong earnings report. For the quarter ending June 30, Mastercard reported net revenue of $7 billion, up 11% from $6.3 billion in the second quarter of 2023. It also reported earnings per share of $3.50, up 17% from $3.00 the prior year; and net income of $3.3 billion, up 17% from $2.8 billion in 2023. That was largely in line with analysts' projections of $3.51 and $6.9 billion, according to investment research from Zacks.
"Uncertainty tied to merchant litigation likely stays an active part of the narrative," said Jeffries analysts in a research note. Analysts from Aristotle Atlantic also said questions over the fee dispute could pressure future card network earnings.
"We are ready and will take all efforts to reach a solution before this goes to trial," Miebach said.
In
"It's too early to speculate about outcomes. There are a number of co-defendants in this case and there has to be a dialogue about the best outcome," Miebach said.
Mastercard on Wednesday also reported strong growth for its value-added services, saying net revenue for these products increased 19% on a currency-neutral basis.
Value-added services refer to the parts of Mastercard's business that do not focus on fees from processing payments. The card network sells technology and other products such as security and consulting to its international network of merchants and card issuers.
That strategy is designed to augment revenue from card fees, which for the past few years has gotten squeezed from
Other payment companies also reported strong consumer spending.
