In one
of the largest antitrust settlements ever, Visa, Mastercard and their
associated banks have agreed to a massive $7.25
billion settlement with U.S. retailers. The latter had sued the former over
fixing of credit and debit card fees
in 2005 through several lawsuits. If the settlement is approved by a judge then
it should put an end to a lengthy legal battle.
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The
details of the settlement were submitted to Brooklyn federal court on Friday. According
to the agreement, Visa, Mastercard and several banks that issue the company’s
cards would make a payment to a ‘class of stores’ of $6 billion. Furthermore,
the card companies will also reduce the swipe fees by 10 basis points for eight
months with an estimated value of $1.2 billion.
Both
Visa and Mastercard appear to be satisfied
with the agreement. Noah Hanft from Mastercard has favored the “amicable resolution”. Joseph
Saunders, CEO of Visa has said believed that the settlement served the best
interest of all the parties.
However,
Tom Robinson from one class plaintiff, National Association of Convenience
Stores has said that the “settlement fail(s)
to introduce competition and transparency, it actually provides Visa and
MasterCard with the tools to continue to shield swipe fees from market
forces," as US retailers pay around $50 billion in swipe fees each year, several
times more than the $7.25 billion settlement. Voicing further concerns, the American
Bankers Association has also said that the settlement
appears to favor retailers, not the consumers.
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Relevant
Links
Visa,
MasterCard in $7.25B swipe-fee settlement [MarketWatch]
Visa,
MasterCard, banks in $7.25 billion retail settlement [Chicago Tribune]
Visa,
MasterCard settle swipe-fee antitrust suit [Washington Post]
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