The recent settlement between Mastercard and Visa in a class action lawsuit marks a significant development in the ongoing battle over transaction fees and antitrust practices in the payment card industry. This legal action, initiated by millions of merchants, alleges that the two global payment giants violated antitrust laws to exploit merchants by charging high fees for processing transactions made with Visa or Mastercard.
Merchants who were affected by these alleged antitrust violations now have the opportunity to seek compensation through the settlement. The claims process is facilitated through the Payment Cards Settlement website, and eligible individuals and entities have until August 30 to submit their claims. The eligibility period spans from January 1, 2004, to January 25, 2019, covering all persons, businesses, and entities that accepted Visa or Mastercard payments in the United States during this timeframe.
The settlement fund totals $198.5 million, with Visa agreeing to pay $105.7 million and Mastercard committing $92.8 million. Central to this case is the imposition of interchange fees by Visa and Mastercard, which are fees charged between banks for processing card transactions. These fees, typically ranging from 1% to 2% of the purchase price, allegedly resulted from corporate collusion, allowing the payment giants to exert significant control over the market.
Compensation for affected merchants will vary based on their actual or estimated interchange fees attributable to Visa and Mastercard transactions during the specified period. While this settlement offers a chance for merchants to recoup some of their losses, it has not been without controversy. Major retail corporations, representing a substantial portion of Visa and Mastercard sales, have criticized the settlement, arguing that negotiators did not adequately advocate for their interests.
This settlement underscores the ongoing tensions between merchants and payment card networks regarding transaction fees and market dominance. It serves as a reminder of the complex dynamics at play in the payment card industry and the ongoing efforts to ensure fair competition and transparency in the market.