Mastercard and U.S. financial institution defendants have recently agreed to pay a sum of $6.2 billion to settle a multidistrict litigation of credit-card interchange or swipe fees filed by a class of U.S. retailers in 2005.
In the litigation, the merchants had accused Visa and Mastercard (which were owned by banks then) of illegally increasing swipe /interchange fees which the merchants were liable to pay on every purchase transaction at the rate of the MIF and which banks use to fund consumers’ credit-card rewards.
The retailers alleged that the MIF was an unlawful restriction of competition under the competition law.
The settlement however, addresses only the monetary claims, and does not resolve class claims seeking modifications to network rules. Visa's share of the total represents about $4.1B, which will be satisfied through funds previously deposited with the court plus the $600M Visa deposited into its litigation escrow on June 28, 2018. No additional funds are required for this class settlement. Visa’s share is covered under its U.S. Retrospective Responsibility Plan, which was created to insulate the company and class A shareholders from financial liability for certain litigation cases.
Kelly Mahon Tullier, executive vice president, general counsel, Visa said, “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. This outcome benefits all parties and enables us to focus more of our resources and attention to building the future of digital commerce together.”