CREDIT CARD GIANTS Visa and MasterCard have agreed to pay over $6 billion (€4.9bn) to millions of merchants which had sued them for allegedly fixing card use fees.
In a negotiated settlement to resolve the seven-year-old case, Visa agreed to pay $4.03 billion to settle the class-action lawsuit while MasterCard will pay $2.02 billion, according to documents filed in the federal New York district court.
The two will also have to cut their so-called “swipe” fees for eight months that could give the merchants another $1.2 billion in relief.
And they will have to allow merchants to impose a surcharge on credit card transactions, subject to a cap.
Law firm Robins, Kaplan, Miller & Cires, which represented about seven million merchants in the suit, said that penalties for the two and other card-issuing banks added up to $7.25 billion — $6.05 billion for past damages and the $1.2 billion for relief.
Also involved in the settlement are card-issuing banks including JPMorgan Chase, Bank of America, Citibank, Wells Fargo, Capital One and others.
“The reforms achieved by this case and in this settlement will help shift the competitive balance from one formerly dominated by the banks which controlled the card networks to the side of merchants and consumers,” said Craig Wildfang, lead lawyer in the case for the merchants.
“Over time, the reforms induced by this case and in this settlement should help reduce card-acceptance costs to merchants, which in turn, will result in lower prices for all consumers.”