This post was originally published on 7/12/18.
Since we last updated you on where things were standing with swipe-fee lawsuit against Visa and Mastercard, a new settlement was expected to be presented to the courts by the end of the year. As expected, Visa and Mastercard filed a new settlement agreement with the courts on September 18. The terms of the new settlement, which is proposed between $5.56 and $6.26 billion, look to replace the original settlement proposed back in 2016.
The courts still need to grant preliminary approval, but it is another step on this long journey. If approved, the settlement would be used to provide payments to merchants who accepted Visa and Mastercard transactions any time after January 1, 2014. We will keep you updated as time goes on.
Original post below.
Some of you may be curious to hear about the latest update in the ongoing swipe-fee lawsuit against Visa and Mastercard. As a refresher, back in 2005, merchants banded together to file a class-action lawsuit against the two card companies as well as banks such as JPMorgan Chase, Citigroup and Bank of America. The rationale stemmed from what merchants felt were unfair business practices, including working with banks and other financial institutions to stomp out competition as well as raising the fees merchants are required to pay in order to accept their credit cards.
The road to a resolution has been long and storied, but the chances of a settlement appear to be one step closer.
On June 28, 2018, multiple sources and news outlets reported that Visa and Mastercard were preparing to offer a settlement to the merchants. If accepted, the settlement would pay out roughly $6.5 billion to those affected by the class action suit.
This isn’t the first time that a settlement has been offered though. Back in 2012, Visa and Mastercard proposed an original settlement of $7.25 billion, but many merchants were not happy with the strict stipulations of accepting the deal. According to details at the time, any merchant who accepted the offer would forever be barred from bringing a lawsuit against Visa and Mastercard for raising the same fees in the future.
Many of the merchants refused the offer, but in the end, it didn’t matter. A federal appeals court threw out the original settlement due to the merchants not having sufficient representation in the matter.
Now, once again Visa and Mastercard are bringing a new offer to the courts. Although this time, merchants would only be held from bringing further lawsuits involving card swipe-fees against the big two for a number of years instead of in perpetuity.
According to news outlets, the details of the new settlement should be finalized in a few weeks and submitted to the courts by the middle of August.
With that said, history has shown that an offered settlement is a long way away from an agreed upon settlement by the courts. We anticipate further litigation for months if not years. Wind River continues to monitor these court rulings and will provide actionable information for our clients if and when they have an opportunity to be part of this or any other settlement.