An appellate court today rejected the settlement in which Visa, MasterCard and credit card-issuing major banks agreed to pay $6.05 billion to settle a long-running lawsuit by retailers alleging the violation of antitrust laws in setting credit card interchange fees. The court ruled that the settlement, which was agreed to in 2012 and finalized in 2014, inadequately represented the interests of the class of merchants suing the card companies.
Under the settlement, the class of plaintiffs were divided into two groups based on when they had accepted or would accept Visa or MasterCard cards. The first class was eligible for monetary relief, while merchants in the second class sought injunctive relief in the form of future network rules. In addition to the $6.05 billion for cash claims, the settlement also included a 10-basis-point reduction in credit card interchange rates for eight months — estimated to equal about $1.2 billion — that would be paid to retailers participating in the suit and deducted from the interchange revenue of all banks.
ABA has long urged an end to the more-than-decade-old litigation, noting that the lawsuit by retailers has nothing to do with consumer benefits and is rather a battle over who should pay to support an efficient payments system that merchants chose to fight in court rather than through market structures.