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Update on the Visa and Mastercard Swipe Fee Lawsuit

Important Update: In an Order dated May 14, 2024, the Court granted an extension of the claims-filing deadline. The deadline to submit claims is now August 30, 2024.

Over the past few weeks, there has been some movement in the Visa – Mastercard antitrust class action lawsuit that may finally bring this litigation to a close. As a reminder, the lawsuit claims that merchants paid excessive fees to accept Visa & Mastercard during January 1, 2004 through January 25, 2019, thus violating antitrust laws. Please note that Visa and Mastercard are denying the claims within the lawsuit.

Part 1: Approved Cash Settlement

The initial part of the agreement focused on a cash settlement and was approved by the court in 2023. Specifically, $5.54 billion will be divided among merchants that accepted Visa and Mastercard cards between January 1, 2004 and January 25, 2019. To participate in this cash settlement, qualifying businesses must submit a claim form by the deadline of August 30, 2024. Claim forms were sent directly to those merchants earlier this year.

If your business qualifies for a portion of the cash settlement, please make sure to submit your claim form by the due date.

Part 2: Proposed Injunctive Relief

The injunctive relief part of the settlement agreement was submitted to the court for approval on March 26, 2024. Details are still being released, but some of the highlights of the proposed settlement are:

  • Interchange (aka swipe fees) will be lowered by 4 basis points (.04%) from the rates published on December 31, 2023 and will be in effect for no less than three years.
  • Interchange rates will not be increased above those published on December 31, 2023 for a period of five years.
  • Surcharging rules will change allowing merchants to impose a 1 percent surcharge on Visa or MasterCard credit card purchases even if they do not surcharge Amex and/or Discover. This surcharge can be imposed at the brand level (meaning all Visa and/or all Mastercard credit cards) or at the product level (meaning a particular type of Visa or Mastercard such as corporate credit cards and rewards/points credit cards, which typically carry a larger interchange fee).
  • The current Visa surcharge rule of up to 3 percent will continue to apply if the merchant wants to add a surcharge to all credit card types.
  • Various discounting and “honor all cards” rules will be clarified for the Brand level, the Issuer level, and for digital wallets.
  • Small businesses will be allowed to form buying groups which in turn can negotiate fees directly with Visa and MasterCard much like large merchants do today.

Please note, this settlement is subject to court approval. A response from the court is not expected until late in 2024 or early in 2025.

Wind River Payments stays on top of all payment-related and compliance issues that affect merchants and software providers with integrated payments. This includes interchange and network fee updates announced by the credit card brands every April and October. As additional updates and clarifications become available, we will publish them. If you would like to have payment-related updates delivered to your email, please sign up below.

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Dan DeBraal

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