NEW YORK -- Visa, MasterCard, and major banks agreed Friday to pay at least $6 billion to settle a lawsuit brought by retailers. A banking industry trade group said the settlement would allow stores to charge customers more to pay with a credit card.
The settlement, if approved by a judge, would resolve dozens of lawsuits filed by retailers in 2005, accusing the companies of fixing fees for processing credit and debit card payments and prohibiting stores from steering their customers to cheaper forms of payment.
The settlement is believed to be the largest anti-trust accord in U.S. history. Most major U.S. banks, which issue MasterCard and Visa cards, were defendants. The merchants include grocery chains Kroger and Safeway, the Rite Aid drugstore chain, and shoe retailer Payless ShoeSource, as well as trade associations such as the National Association of Convenience Stores, National Grocers Association, and the American Booksellers Association.
Lawyers for the plaintiffs said the card companies have agreed to reduce swipe fees for eight months, valued at approximately $1.2 billion.
An additional $525 million will be paid to stores suing individually, according to the documents.
"This is a historic settlement," said Bonny Sweeney, a lawyer for the plaintiffs. "In addition to refunding billions of dollars to retailers that paid artificially inflated interchange fees, the reforms will create real price competition, leading to reduced card-acceptance fees for retailers."
Noah Hanft, general counsel for MasterCard, said the company believed its interests were "best served by an amicable resolution" to the case. Visa Chief Executive Officer Joseph Saunders said the settlement was in the best interest of all parties. He did not expect the settlement to affect its earnings guidance.
Visa and MasterCard stock both jumped in after-hours trading. Visa climbed 2.8 percent and MasterCard rose 3.7 percent.