VISA, Mastercard and banks that issue their credit cards have agreed to a historic $7.25bn (£4.65bn) settlement with US retailers in a lawsuit over the fixing of credit and debit card fees.
The settlement agreed over the weekend, if approved by a judge, would be the largest antitrust settlement in American history and resolve dozens of cases filed by retailers in 2005.
The card companies and banks would also allow shops to start charging customers extra for using certain credit cards in an effort to steer them toward cheaper forms of payment.
Swipe fees – charges to cover processing credit and debit payments – are set by the card companies and deducted from the transaction by the banks that issue the cards, passing on the cost to merchants, the lawsuits said.
The proposed settlement involves a payment to a class of retailers of $6bn from Visa, Mastercard and more than a dozen of America’s largest banks who issue the companies’ cards.
The card companies have also agreed to reduce swipe fees by the equivalent of 10 basis points for eight months for a total consideration to stores valued at about $1.2bn, according to lawyers for the plaintiffs.
The 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 Craig Wildfang, who represented the claimants.
Noah Hanft, general counsel for Mastercard, said the company believed its interests were “best served by an amicable resolution” of the case.
Visa chief executive Joseph Saunders said the settlement was in the best interest of all parties and did not expect the settlement to impact its current guidance.
City A.M. Reporter