More than a decade after merchants brought a class-action suit against Mastercard, Visa and card-issuing banks in 2005, a settlement between the parties is reportedly in the works. While it is not known how the payment would be split, the card networks and a number of banks may pay merchants a total of approximately $6.5 billion, The Wall Street Journal reported.
On Tuesday (June 26), the parties reportedly told the U.S. District Court for the Eastern District of New York that they had come to a settlement. While they plan to draft a deal by the middle of July, they intend to complete a final agreement by the middle of August. The case centers around the fees that merchants pay when accepting card payments: merchants contend that the banks and networks worked to inflate those fees.
Some larger merchants had decided against taking a settlement of $7.25 billion that came to fruition in 2012, in part because they would not have been able to file lawsuits over swipe fee increases that might occur in the future. But an appeals court had invalidated the settlement. And, since the Supreme Court decided not to hear the case, it landed back in district court.
The news comes as the Supreme Court ruled on Monday (June 25) that American Express, the third-largest card network in the U.S., did not violate federal antitrust laws with business practices — known as anti-steering — that prohibit merchants from, in turn, dissuading consumers from using American Express cards.
The ruling, in the case Ohio vs. American Express, was handed down with a 5-4 vote. In essence, the court denied the argument — brought forth by the government — that competition in the marketplace had been stymied by anti-steering. As noted by PYMNTS as the case progressed, the argument put forth by the government (and 11 U.S. states) hinged on the claim that the Amex mandates hurt merchants and that the benefits cardholders got with rewards should be ignored.
In one excerpt from the ruling, Associate Justice Clarence Thomas, writing for the majority, penned that the business practice, which has been in place for decades, was and is, in fact, legal. Amex’s practices, he stated, have fostered “robust inter-brand competition and has increased the quality and quantity of credit card transactions.”