Visa settlement overview :
- Who: Visa and Mastercard have reached a settlement with a class of merchants.
- Why: The merchants had accused the credit card companies of forcing them to accept higher-fee cards and locking out cards with cheaper rates.
- Where: The Visa, Mastercard class action lawsuit was filed in New York federal court.
Visa and Mastercard have reached a class action settlement with merchants resolving two decades of antitrust litigation over rules set by the credit card companies that allegedly reduced choice and forced merchants to accept higher-fee cards without the ability to steer consumers toward ones with cheaper rates.
The new Visa Mastercard settlement, announced Nov. 10, would permit more flexibility on what cards are accepted and would lower fees — with a five-year cap — to address a New York federal judge’s concerns that an earlier settlement didn’t go far enough.
Visa and Mastercard said the settlement implements “historic” changes and that the merchants are “unlikely” to do better if they went to trial.
U.S. District Judge Margo Brodie said last year that Visa and Mastercard could likely tolerate a “substantially greater judgment” than one that would have slashed merchant fees by about $30 billion over five years.
The merchants said the new agreement “can save merchants well more than $200 billion over the course of the settlement,” based on the estimates of their experts.
“The amended settlement remedies each of those concerns and indeed provides reforms far beyond those the court discussed,” the merchants said in their brief seeking preliminary approval of the new settlement.
Visa, Mastercard settlement expected to affect more than 12M merchants
The Visa settlement is expected to affect more than 12 million merchants in the United States. Representatives of the class have been battling since 2005 with Visa, Mastercard and several banks over the rules.
The settlement includes “sweeping changes” to the companies’ Honor-All-Cards rules, which require merchants to accept all cards from a network if they accept any, Law360 reports.
The settlement will also allow merchants to surcharge the companies’ credit cards up to 3%, regardless of whether the merchant also accepts or surcharges American Express or other competing cards, according to the publication.
In 2018, Visa and Mastercard agreed to a settlement worth up to $6.2 billion with a class of merchants to resolve claims the companies engaged in anti-competitive practices.
What do you think of the Visa, Mastercard settlement? Let us know in the comments.
The merchants are represented by Linda P. Nussbaum and Susan R. Schwaiger of Nussbaum Law Group PC, Steve D. Shadowen and Richard M. Brunell of Hilliard & Shadowen LLP, Robert G. Eisler and Chad B. Holtzman of Grant & Eisenhofer PA and Michael J. Freed, William H. London, Robert J. Wozniak and Michael E. Moskovitz of Freed Kanner London & Millen LLC.
The Visa, Mastercard class action lawsuit 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.
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