Mastercard, Visa and several other banks have agreed to pay an additional $900mto settle monetary damages related to the US merchant class-action litigation.
Image: MasterCard's General Counsel and Chief Franchise Officer. Photo: courtesy of MasterCard.
In the class-action lawsuit, which was filed in 2005, merchants alleged that credit-card fees and card-acceptance rules set by card companies benefit the banks.
The latest agreement, which formalizes prior negotiations, has been signed by all of the defendants, including Mastercard, Visa and a number of banks, and the court-appointed class counsel for the merchants.
The current deal addresses monetary claims, and does not resolve class claims seeking changes to network rules.
The $900m will be added onto the $5.3bn paid to merchants in 2012. Mastercard agreed to pay $108m on a pretax basis of the additional settlement payment, while share of Visa is $600m.
Visa executive vice president and general counsel Kelly Mahon Tullier 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.”
The settlement, which will be filed with the court seeking approval, is an amendment to the financial terms of the 2012 Class Settlement agreement.
Mastercard general counsel Tim Murphy said: “We are taking a significant step toward closing a chapter in a long-standing case.
“We can put this behind us and focus on continuing to innovate with our merchant partners to deliver the experience and convenience that consumers expect.”
Mastercard said it recorded a $210m charge in its second-quarter 2018 financial statements, which will cover the financial obligation under the latest agreement and for estimated liabilities associated to filed and anticipated opt-out merchant cases.
The settlement agreement does not cover the merchant class-action that seeks the revision of network rules.
Following court approval of the monetary deal, Mastercard and its customer financial institutions will receive a release of all monetary claims alleged by the merchant class members concerning the company’s interchange and fee structure and merchant acceptance rules.
In July 2012, MasterCard has signed an agreement in principle to settle all claims brought by the individual merchant plaintiffs.