Visa and MasterCard have agreed to pay close to $6.2 billion as part of the nation’s largest-ever antitrust settlement.
The agreement, writes CNNMoney, concludes a 13-year old lawsuit brought against Visa, MasterCard and several commercial merchants. Plaintiffs, comprised largely of local retailers and chains, claimed the companies were foisting unfair ‘card swipe’ fees on businesses. Instead of giving companies the opportunity to negotiate with merchants one-on-one, Visa and MasterCard structured their per-swipe fee to benefit banks.
CNN says the suit was settled once before, some six years ago.
However, the settlement was challenged by ‘major merchants’ as unfair. It was later overturned on appeal.
Tuesday’s amended amount represents a $900 million increase over the last settlement. The $6.2 billion payout has been ‘disclosed in filings by Visa and MasterCard.’ Before repayment can begin, the settlement must be approved by a judge.
MasterCard and Visa both said reaching an agreement with merchants has been a critical development in the case and its settlement.
“We can put this behind us and focus on continuing to innovate with our merchant partners to deliver the experience and convenience that consumers expect,” said Tim Murphy, general counsel for MasterCard.
Visa, too, tried to conclude the litigation on a positive note, leaving the litigation behind.
“After years of thoughtful negotiation, we are pleased to be able to reach this agreement and move forward in our partnership with merchants to provide consumers convenient, reliable, secure ways to pay,” said Visa general counsel Kelly Mahon Tullier.
Despite the development, CNN says that many of the nation’s largest retailers have opted out of the settlement. Wal-Mart, Target and Kroger have all declined to accept any portion of the reward, in part because they’re able to negotiate better terms with major credit card companies than local businesses and regional chains.
“The top 1% of merchants make up 25% of the nation’s commerce,” attorney Patrick Coughlin said. “They were never going to be part of the deal. But this is important for the other 99% who handle the other 75% of purchases.”
Coughlin, who helped bring the original suit, said the retraction of major retailers will be reflected in a smaller payout. He still expects that the end-result will be better for smaller businesses, who’ll have a larger pot to share amongst themselves.
“At a minimum, we got them an additional $200 million,” Coughlin said.
Nevertheless, some retailers and their advocates say the fight’s just begun.
“The monetary settlement doesn’t solve the problem,” said Stephanie Martz, general counsel for the National Retail Federation trade group. “Ending the practices that lead to these anti-competitive fees is the only way to give merchants and consumers full relief once and for all.”