A host of banks and credit car providers, (13 all in total) the most prominent being Visa and MasterCard have agreed to settle litigation filed against them and will pay a reported $7.25 billion to retailers who said the banks engaged in price-fixing on credit card transaction fees. The settlement is relevant to approximately 7 million retailers and is viewed as one of the largest antitrust class-action settlements in the U.S. The retailers in their complaint alleged that the credit card firms had committed collusion which resulted in a monopoly whereby merchants were required to pay higher fees to process the credit cards their customers use to make purchases.
The $7.25 billion ($6.05 billion allocated for damages) plus a $1.2 billion payment representing a calculated value to retailers of a temporary reduction in the level of fees they pay on Visa and MasterCard transactions, is expected to make its way to the victors in the next 12 months.
Reportedly the settlement also calls for reforms to be taken by Visa and MasterCard including a requirement that they negotiate with merchant-organized buying groups and a limit of fees paid between banking institutions on fee’s for transactions. Some analysts believe that the change will result in lower prices for consumers, but many skeptics don’t believe that is a realistic possibility.Pages: