Visa and Mastercard will have to continue rolling with the punches as it becomes clear that even the record $6.2 billion settlement made last week won’t be enough to end the long-running battle with the US’s biggest retailers.
In the largest-ever class-action settlement of a US antitrust case, Visa and Mastercard agreed to pay between $5.54 billion and $6.24 billion to a class of more than 12 million merchants who accept the payment networks’ cards. The total is in line with sums the companies previously set aside to cover the costs of the litigation.
But the retailers are now gearing up for the next round in their fight with the payment networks. The settlement addressed only monetary damages associated with the lawsuit. There’s a separate class of merchants fighting for changes to Visa and Mastercard’s business practices.
“The monetary settlement doesn’t solve the problem,” says Stephanie Martz, general counsel for the National Retail Federation trade group. “Ending the practices that lead to these anti-competitive fees is the only way to give merchants and consumers full relief once and for all.”
The card networks’ dispute with retailers began in 2005, when Visa and Mastercard were still owned by banks. Merchants had accused them of violating antitrust laws by illegally inflating interchange fees, that merchants pay on every purchase transaction and which banks use to fund consumers’ credit-card rewards.
As part of the payment for the settlement, Visa and Mastercard will use shares owned by banks including JPMorgan, Citigroup and Bank of America. The lawsuit is one of many flashpoints in the battle between retailers and financial firms over the $90 billion that US merchants spend every year on interchange fees.
“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,” said Kelly Mahon Tullier, Visa’s general counsel, in a statement.