After 13 years of argument, Visa and MasterCard are nearing dawn on the issue of fees charged when retailers take card payments, as leaked by a source.
The two card providers and big box banks like Bank of America Corp., JPMorgan Chase & Co., and Citigroup Inc. would compensate merchants up to $6.5 billion as part of the terms of the resolution, the source said, asking to be kept anonymous because the settlement hasn’t been made official.
The swipe-fee lawsuit was presented to the court in support of 12 million retailers worldwide and was filed over a decade ago. In 2016, a federal appeals court turned down a $5.7 billion resolution of the allegations accusing credit card firms of “improperly fixed credit-card swipe fees also known as interchange” that merchants pay when consumers transact using credit or debit cards.
Mastercard reported earlier this month that it plans to that it will boost its assets by $210 million this quarter “thanks to progress in negotiations linked to the financial damages claims.” Soon after, Visa said it had deposited another $600 million to the funds in its litigation escrow account. Spokespeople for both firms were reluctant to comment beyond the statements.
It should be remembered that Visa’s litigation escrow account already had around $884 million as of March 31, as reported by the company in a quarterly regulatory filing. Their counterparts Mastercard said it had set aside $737 million for litigation as of the same date.
However, this current settlement doesn’t cover provisions that hitched the 2016 resolution effort; as well as phrasing that would stop merchants from filing lawsuits over interchange rates in future even if they won’t take monetary benefits from this resolution, said the source.
Stating her expectations on the settlement, Mitch Goldstone said the parties involved two respected mediators for over a year in arriving at this agreement, and that the results shouldn’t raise any controversies. Goldstone is the CEO of ScanMyPhotos.com, an active member in the swipe-fee litigation team.
Also, The Wall Street Journal reported that legal representatives for both sides requested the then judge to reach a compromise, as evidenced by a June 27 filing with the court. Previously, they had agreed on April 17 to resolve the claims by June 25.
Now, we wait for the official settlement after several court sittings and high risk merchant account owners representing the lawsuit can be glad they’ll emerge victoriously.