In In re Payment Card Interchange Fee and Merchant Discount Antitrust Litigation, the defendants have agreed to a $7.25 billion settlement of multidistrict litigation being litigated in the Eastern District of New York.
Plaintiff merchants filed the 2005 case alleging that the Visa and MasterCard associations and large banks conspired to increase the fees paid by merchants to accept credit cards. If the court approves the settlement, a class of approximately seven million card-accepting merchants will receive $6.05 billion for past damages and an eight-month fee reduction anticipated to total approximately $1.2 billion. Visa and MasterCard also agreed to settle with merchant plaintiffs that had filed separately for $525 million. Interestingly, Visa will bear the larger share of the two settlements, $4.4 billion to MasterCard’s $790 million.
In addition to the monetary payments, Visa and MasterCard will modify their network rules to (1) allow retailers to impose a surcharge on credit transactions; and (2) form merchant buying groups to negotiate interchange rates collectively.
As a class action settlement, court approval is required. Approval is not assured, given that the National Association of Convenience Stores, a plaintiff, and The National Retail Federation, which is not a party, have come out in opposition to the settlement on the ground that it does not do enough to create competition in the setting of merchant credit card fees.
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