Visa, MasterCard, Banks Reach New $6.2B Swipe Fee MDL Settlement

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Visa, MasterCard, and numerous banks including Bank of America, Barclays, JPMorgan Chase, Citibank, and SunTrust Bank, have reached a new $6.2 billion settlement deal to resolve a massive antitrust swipe fee multidistrict litigation.

On Tuesday, the companies agreed to add up to another $900 million to an existing $5.3 billion settlement that was reached to resolve a multidistrict litigation claiming that MasterCard and Visa, along with numerous banks, unlawfully entered into agreements that raised fees that merchants pay when customers make credit or debit card transactions.

Allegedly, the fees that merchants were paying were higher than what they would have been if the fees had been just determined by free-market competition.

Though the multidistrict litigation was brought forward by a group of merchants, the settlement deals have faced significant opposition from merchants, who worry that settling this case as opposed to taking it to court, would enable credit card companies to continue to enter into antitrust agreements to raise fees, taking advantage of businesses and customers, which outweighed the cash benefit that settling would provide to merchants.

After a decade of litigation, the credit card companies and banks reached one settlement with the merchants in 2012. That settlement was for $7.25 billion. When $5.3 billion had already been put into escrow, the Second Court rejected that deal.

Under the new $900 million deal that was reached on this week, Visa will pay $600 million, MasterCard will pay $108 million, and the banks will pay the rest. If enough plaintiffs opt out of the deal, the total settlement amount could be reduced.

According to Visa, up to $700 million may be returned to the banks and credit card companies if more 15 percent of Class Members opt out of the settlement deal.

The 15 percent would be determined not by individual merchants, but by payment volume in the settlement. Visa said that “the amount that may be returned to defendants is calculated using a formula based on the payment volume attributable to class members that opt out of the class. If more than 25 percent of class members (by payment volume) opt out of the class, defendants may terminate the amended settlement agreement.”

According to attorney for the merchants, this opt-out language in the new deal will enable merchants to get roughly $200 million more than the original settlement.

The settlement will be at minimum $5.56 million, and at maximum $6.26 billion. The deal will still reportedly be the largest antitrust class action settlement, as it was before the additional $900 million was added.

“The parties worked with two well-regarded mediators for more than a year to reach this agreement,” said Craig Wildfang of Robins Kaplan LLP, one of the lead lawyers for the damages class.

Top Class Actions will post updates to this class action settlement as they become available. For the latest updates, keep checking TopClassActions.com or sign up for our free newsletter. You can also receive notifications when this article is updated by using your free Top Class Actions account and clicking the “Follow Article” button at the top of the post.

The merchants are represented by Robins Kaplan LLP, Berger Montague PC, and Robbins Geller Rudman & Dowd LLP.

The Visa MasterCard Fee Multidistrict Litigation is In re: Payment Card Interchange Fee and Merchant Discount Antitrust Litigation, Case No. 1:05-md-01720, in the U.S. District Court for the Eastern District of New York.

UPDATE: On Jan. 24, 2019, a New York federal judge preliminarily approved a massive Visa, Mastercard swipe fee settlement, which would add anadditional $900 millionfor merchant Class Members.UPDATE 2: March 2019,a settlement website has recently been established for Class Members in the Visa, Mastercard swipe fee class action lawsuit. While Claim Forms are not currently available, the website provides an opportunity for Class Members to pre-register to receive one.