Retailers Win $5.7 Billion Settlement from Visa and MasterCard

On Friday, U.S. District Judge John Gleeson approved a $5.7 billion class-action settlement between MasterCard, Visa, and a coalition of merchants.

In 2005, merchants in the suit claimed that MasterCard, Visa, and issuing banks had violated antitrust laws in an effort to keep transaction fees high. The settlement was priced at $7.25 billion, but fell to $5.7 billion after a number of merchants had opted out of accepting it, claiming that it would not curb fees nor give merchants the ability to offset them.

Plaintiffs in the suit who rejected the settlement number in the thousands, and include the National Association of Convenience Stores, Amazon, Wal-Mart, and Best Buy.

Though the settlement promised a payout, a temporary lowering of transaction fees, and the ability for merchants to charge their customers a fee for using credit cards, about 8,000 merchants (who contribute 25% of the transaction total in the suit) had opted out of accepting it.

Some states prohibit merchants from putting a surcharge for card-transactions, and charging customers would most likely make prices less competitive. More importantly, these merchants claim that settling would bar them from taking any other legal actions in the future to contest swipe fees. It’s a claim that Judge Gleeson shot down, saying that merchants would still be able to contest new fees or rules that Visa and MasterCard introduce.

A number of retailers who rejected the settlement filed their own lawsuits.

The federal government has taken a stand on the issue of unfair fees. However, the Durbin Amendment, which was an addition to the Dodd-Frank Act, targets only bank issued debit cards.