MasterCard & Visa Pay $6.2bn To Settle Swipe Fee Lawsuit

MasterCard, Visa along with a number of major banks in America have decided to settle the class action lawsuit brought against them by the nation's top merchants. The suit is over 13 years old and has been the topic of long and drawn out legal battle. It seems that the banks have finally gotten tired of all the legal drama and decided to just pay everyone to the tune of $6.2 billion in total fees.

The class action lawsuit claimed that MasterCard and Visa were violating antitrust laws and fixing swipe fees so that it would financially benefit them and the banks. The two payment processors fought the case in the early years but back in 2012 they decided to settle.

The problem was that the merchants felt that the settlement deal was unfair and paid too low. The continued their legal proceedings and it appears that Visa and MasterCard have finally decided to pay more and close the case.

Newsy

The new settlement amount appears to have finally satisfied the plaintiffs. The final $6.2 billion settlement is an increase of $900 million over the old one. Visa will be paying an additional $600 million, while MasterCard will handle $108 million of the settlement.

In a statement, Tim Murphy, general counsel for MasterCard said

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

This was echoed by Visa's general counsel, Kelly Mahon Tullier who stated that this was a step forward and would allow the payment processors and the merchants to move forward with their relationship.

Larger Merchants Dropping Out

However, this is not the end of the card swiping saga. According to sources, the larger merchants who were part of the lawsuit are cutting out. This includes some of the biggest retailers in the United States, like Walmart, Target and Kroger. Experts point out that this is because the larger stores have the ability to better negotiate outside of the lawsuit than the smaller retailers.

According to Tullier, the top one percent of the merchants involved in the lawsuit control 25 percent of the country's commerce. This means that they have more bargaining power on their own. However, the lawsuit is still important for the remaining 99 percent of the merchants still in the lawsuit.

This dropping out is possible because of another advantage of the current settlement deal. The big merchants can drop out without invalidating the entire lawsuit. It would also give the smaller merchants $200 million more as the larger merchants drop out.

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