Visa, Mastercard reach swipe fee settlement

Bloomberg

Visa Inc. and Mastercard Inc. agreed to pay as much as $6.2 billion to end a long-running price-fixing case brought by merchants over card fees, the largest-ever class action settlement of an antitrust case.
The total is in line with sums the two companies previously set aside to cover the costs of the litigation, including $5.3 billion already held by the court and an additional $900 million reserved earlier this year, as the two sides drew closer to an agreement.
They’ll pay between $5.54 billion and $6.24 billion, according to a filing.
“After years of thoughtful negotiation, we are pleased to be able to reach this agreement and move forward in our partnership with merchants to provide consumers convenient, reliable, secure ways to pay,” Kelly Mahon Tullier, Visa’s general counsel, said.
As part of the payment, Visa and Mastercard will use shares owned by banks including JPMorgan Chase & Co., Citigroup Inc. and Bank of America Corp. The lawsuit is one of many flashpoints in the battle between retailers and financial firms over the $90 billion that US merchants spend every year on swipe fees.
Mastercard shares rose 0.4 percent to $217.36 in early trading in New York on Tuesday, while Visa’s shares climbed 0.3 percent.
The dispute began in 2005, when Visa and Mastercard were still owned by banks. Merchants had accused them of violating antitrust laws by illegally inflating swipe fees, or interchange, that merchants pay on every purchase transaction and which banks use to fund consumers’ credit-card rewards. The two payments networks have since gone public — Mastercard in 2006, and Visa in 2008 — and their shares have soared.
This isn’t the first time a settlement has been reached in the case.
In 2013, the parties struck a then-record $5.7 billion deal that was approved by US District Judge John Gleeson, only to have a federal appeals court reject it three years later, ruling that a provision that barred merchants from suing over fees was unfair.
The court also said that lawyers who represented retailers nationwide didn’t do enough to protect their interests. Gleeson stepped down from the bench in 2016 and the case is now assigned to Judge Margo K. Brodie.