Visa and MasterCard will be paying out $6.2 billion to settle a lawsuit brought by 12 million merchants located across the United States. In the case, the defendants claimed that both MasterCard and Visa inflated swipe fees so that the banks would come out ahead financially. With this settlement, Visa will be paying out $4.1 billion, while MasterCard will foot the rest of the bill.
This case has been tied up in the courts for 13 years, and it is reportedly the biggest class action settlement of an antitrust case in the United States. “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 Kelly Mahon Tullier, executive vice president, general counsel, Visa. “This outcome benefits all parties and enables us to focus more of our resources and attention to building the future of digital commerce together.”
While this settlement does resolve the financial claims of the merchants, it did not settle other class action claims looking to create change in credit card networks.
Not the first settlement
This is not the first time this class action lawsuit has been settled. In 2012 a settlement was reached by both sides. Yet, the larger merchants took issue with the settlement because it stopped merchants from filing additional lawsuits further down the road.
The settlement was appealed by these merchants, and it was subsequently overturned by the courts. At that time Visa had paid funds to the court, and on June 28th, 2018th they paid an additional $600 million into a litigation escrow account. With all of these payments, they will not have to pay any additional money to cover the settlement.
In addition to the funds MasterCard had put aside in 2012, they will pay an extra $108 million. All in all Visa and MasterCard have agreed to pay out an additional $900 million with this new settlement.
“We are taking a significant step toward closing a chapter in a long-standing case,” said Tim Murphy, general counsel, MasterCard. “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.”