By Jonathan Stempel

NEW YORK (Reuters) - A federal judge said Visa and Mastercard 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 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 in 2023.

"Without evidence of Visa's and Mastercard's 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 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 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.

(Reporting by Jonathan Stempel in New York; Editing by Daniel Wallis)