On December 13, 2013, after years of litigation, the court system approved a Class Settlement among merchants, Visa, MasterCard and other Defendants in a class-action lawsuit.
Visa, MasterCard and some large banks have agreed to pay nearly $7 billion to an estimated 8 million merchants who have accepted any Visa- and/or MasterCard-Branded cards in the United States at any time from January 1st, 2004 to November 28th, 2012. This settlement is billed as the largest for an antitrust class-action case in U.S. History.
Merchants felt they were paying excessive fees to accept Visa and MasterCard cards. They also felt that Visa, MasterCard and the banks were conspiring together when setting these rates. These fees are known as ‘interchange’ fees which are set by Visa and MasterCard. Along with Visa and MasterCard, the issuing banks receive a portion of the fees as revenue each time their cards are used. Fees to accept credit and debit cards can be one of the most costly expenses for a business who accept these cards, especially large retail corporations.
The payment networks and banks reached an agreement to pay $6.05 billion to the proposed class of merchants and temporarily reduce swipe fees by $1.2 billion. The settlement came in lieu of a decision of which side was right or wrong and if any laws were violated. The settlement is the product of extensive negotiations and court-supervised mediation. Having the case settled allows the class members to receive payments and other benefits. When the court overseeing this case granted approval to the settlement, a number of merchants submitted notices that they plan to appeal the decision.
There are other outcomes to the settlement besides monetary relief – rule changes. The changes which took effect on January 27th, 2013 include:
• Ability for merchants to surcharge and provide discounts at the POS to help influence payment methods
• Allow merchants to form buying groups to secure reduced fees and rates
• Merchants may accept Visa or MasterCard at fewer than all of their stores if they operate multiple businesses under different trade names
• Merchants can set a $10 minimum purchase for Visa and MasterCard transactions
Currently, the decision that granted approval to the settlement is being appealed. Claim forms for merchants wanting to receive payments and other benefits are not being provided until after the appeal process has reached a conclusion.
For more in-depth details about the Visa MasterCard class action lawsuit, please visit: www.paymentcardsettlement.com