Visa, Mastercard and several credit-card issuing banks have agreed to settle a long-running dispute with merchants over credit card swipe fees. The class action lawsuit was brought more than a decade ago on behalf of approximately 12 million retailers who accept credit cards.
The 13-year-old lawsuit accuses Visa, Mastercard and several banks that issue the cards of violating federal antitrust laws. Merchants say they are forced to pay a swipe fee every time a customer uses a credit card and that they are not allowed to direct customers to payment methods that are less expensive for the merchant.
The credit card issuers named in the suit include Bank of America, Citigroup and JPMorgan Chase & Co.
In 2012, the credit card companies and retailers reached a previous settlement agreement in the case. That $7.25 billion settlement was rejected by major merchants and was ultimately thrown out by an appellate judge in 2016. Opponents had argued that it did little to stop the anticompetitive practices and would have limited merchants’ access to the courts in the future.
The 2012 settlement would have been the largest-ever cash settlement in a U.S. antitrust suit. However, the settlement dropped to $5.7 billion after about 8,000 merchants opted out.
The new settlement is $900 million larger, requiring Visa to pay an additional $600 million and Mastercard to pay an additional $108 million, according to corporate filings.
However, many of the nation’s largest merchants have already opted out. These include Walmart, Kroger and Target. This may be because they have more clout and can negotiate better deals than ordinary retailers can.
One of the attorneys who brought the case said the new deal is superior to the 2012 settlement because it allows larger merchants to drop out without affecting the rights of smaller ones.
“The top 1% of the merchants make up 25% of the nation’s commerce. They were never going to be part of the deal,” he told CNN Money. “But this is important for the other 99% who handle the other 75% of purchases.”
The new settlement must still be approved by a judge before it can go into effect.