POSTED: 01:39 p.m. HST, Dec 13, 2013
LAST UPDATED: 01:40 p.m. HST, Dec 13, 2013
A U.S. federal judge has approved a $7.25 billion settlement between merchants and Visa Inc. and MasterCard Inc. over credit card transaction fees.
A group of 19 merchants and trade groups sued the companies in 2005, alleging they conspired to fix fees charged to stores for handling credit card payments. A settlement was reached in last year but some retailers rejected it, in part because of a provision that barred future lawsuits.
The $7.25 billion settlement figure does not reflect companies that opted out.
The settlement also allows merchants to tack on surcharges for credit card transactions to help offset these fees. Judge John Gleeson said the agreement has the "potential to unleash a new competitive force on interchange fees."
MasterCard of Purchase, N.Y., said the final approval marks an important milestone in putting the litigation behind it. San Francisco-based Visa also said the settlement is a significant achievement and said it is fair for all parties involved.
Not all retailers are pleased with the final approval though.
A number of the nation's largest retailers, including Target Corp. and Macy's Inc., were among those that rejected the settlement last year. And the National Retail Federation, the world's largest retail trade association, said today that the settlement is "deeply flawed". The group said it will do nothing to reduce swipe fees or keep them from rising of the future.
"A decision to approve it violates established law and common sense," NRF's general counsel Mallory Duncan said in a statement. "We are reviewing the ruling and will take whatever steps are necessary to protect the rights of merchants and safeguard the pocketbooks of their customers."