Retailers Win $7.2 Billion from Visa, MasterCard

In a file photo, Visa credit cards are arranged on a desk in San Francisco. Visa and MasterCard have agreed to pay more than $7.2 billion in a class-action lawsuit alleging the companies fixed credit card swipe fees. (Justin Sullivan/Getty Images)

NEW YORK—Millions of merchants have won a total of $7.25 billion in a settlement from credit card giants Visa Inc. and MasterCard Inc. in the largest antitrust resolution in American history.

The settlement resolves lawsuits dating back to 2005 brought by retailers that Visa and MasterCard fixed debit and credit card swipe fees. The settlement was filed in a federal court in New York, and must be approved by a judge.

Swipe fees are charged by the card companies, as a small percentage of each transaction.

In the settlement, Visa will pay $4.03 billion and MasterCard will pay $2.02 billion to a class of merchants, including small businesses and stores, according to the court documents.

In addition, both companies will also agree to cut swipe fees by 10 basis points (0.1 percent) for eight months, which amounts to an additional $1.2 billion in relief for merchants.

The settlement also allows merchants and stores to impose a “checkout fee” to pass onto consumers, which is limited by a cap.

“The reforms achieved by this case and in this settlement will help shift the competitive balance from one formerly dominated by the banks, which controlled the card networks to the side of merchants and consumers,” said K. Craig Wildfang, a partner at Robins, Kaplan, Miller & Ciresi, a Minneapolis-based law firm representing a portion of the plaintiffs.

But the saga does not appear to be wholly over, as some parties are looking to reject the settlement, claiming that it does not go far enough to protect merchants.

“Not only does the proposed settlement fail to introduce competition and transparency into a clearly broken market, it actually provides Visa and MasterCard with the tools to continue to shield swipe fees from market forces,” said Tom Robinson, chairman at the National Association of Convenience Stores.

Robinson represents a class of the plaintiffs, which will reject the settlement.

Also included in the settlement are credit card issuers such as JPMorgan Chase, Capital One, and Bank of America.

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