Visa, MasterCard, banks in $7.25 billion retail settlement
By Jessica Dye
NEW YORK (Reuters) - Visa Inc, MasterCard Inc and banks that issue their credit cards have agreed to a $7.25 billion settlement with U.S. retailers in a lawsuit over the fixing of credit and debit card fees in what could be the largest antitrust settlement in U.S. history.
The settlement, if approved by a judge, would resolve dozens of lawsuits filed by retailers in 2005. The card companies and banks would also allow stores to start charging customers extra for using certain credit cards in an effort to steer them toward cheaper forms of payment.
The settlement papers were filed Friday in Brooklyn federal court.
The proposal involves a payment to a class of stores of $6 billion from Visa, MasterCard and more than a dozen of the country'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 $1.2 billion, according to lawyers for the plaintiffs.
An additional $525 million will be paid to stores suing individually, according to the documents.
"This is an historic settlement," said Bonny Sweeney, a lawyer for the plaintiffs. "In addition to refunding billions of dollars to retailers that paid artificially inflated interchange fees, the reforms will create real price competition, leading to reduced card-acceptance fees for retailers."
Noah Hanft, general counsel for MasterCard, said the company believed its interests were "best served by an amicable resolution" of the case. Visa CEO Joseph Saunders said the settlement was in the best interest of all parties and did not expect the settlement to impact its current guidance.
But not everyone was pleased with the proposal. One class plaintiff, the National Association of Convenience Stores, slammed the deal in a statement from its president, Tom Robinson, who is also president of Robinson Oil Corp. Continued...