The Court of Appeals for the Ninth Circuit upheld a lower court ruling that dismissed a suit brought by a group of merchants claiming that MasterCard, Visa USA and a group of US banks, had conspired to set the interchange fees charged to retailers every time a payment card is used.
The merchant group - which is led by hair salon operator Sheri Kendall - had claimed that the current interchange fee structure in the US violated antitrust laws.
In July 2005, the federal court of the Northern District of California dismissed the lawsuit. The decision was appealed to the US Court of Appeals, which upheld the dismissal.
MasterCard general counsel and chief franchise officer Noah Hanft welcomed the decision and says the case was dismissed on grounds that the "merchants had failed to present facts that established a conspiracy".
Hanft says the the court rejected claims the interchange fee effectively "sets a floor" for each bank's merchant discount fee. The court concluded that a decision by banks to recoup their costs "suggests a rational business decision, not a conspiracy".
"No US court has found interchange to be illegal," says Hanft.
The merchant group is one of a number of trade groups that have been angered by interchange fees charged on card transactions and have filed dozens of lawsuits against MasterCard, Visa and many card issuing banks over the levy.
Last year The Merchants Payments Coalition (MPS) accused the credit companies of using a portion of the interchange fee - which is meant to cover processing costs - for marketing campaigns instead. The coalition said in July that a study had shown that card companies and banks spend only about 13% of the interchange fee on actual processing. The rest goes on marketing, profit and other services like rewards programmes.
However merchants are set to get a greater say in the setting of interchange fees with the introduction of new legislation in the US that will allow them to negotiate interchange charges imposed on card transactions.
The Credit Card Fair Fee Act is the first attempt by US Congress to address credit card interchange fees and is the outcome of a hearing held last year by the House's anti-trust workforce.
The US move follows action by the European Commission against MasterCard over interchange fees charged on cross-border card transactions.
The EC said in December that the multilateral interchange fees (MIF) charged for cross-border transactions made with MasterCard and Maestro debit and credit cards violated EC Treaty regulations and gave MasterCard six months to scrap the fee structure or incur daily penalty payments.
However MasterCard has applied to the European Court of First Instance to annul the EC's decision.
The Commission is also reported to be investigating the fees charged by Visa Europe following the expiry of an antitrust agreement between the card company and the EU's Competition Commission.
In 2002 Visa agreed to reduce levels of interchange fees for processing card transactions in return for immunity from legal action. However the exemption ended at the end of December and Brussels is said to be re-investigating the fee structure.