Visa and Mastercard (maybe) reach $6.2bn settlement over swipe fee dispute

19th September 2018
Callum Godwin
Callum Godwin

Visa, Mastercard and other US-based financial institutions have settled a long-running antitrust case brought on behalf of 12 million merchants over unfair swipe fees. The high-profile case, which began in 2012, has resulted in the largest ever class action settlement of its kind and means the defendants must repay merchants between $5.54 billion and $6.24 billion. The question, however, is now whether merchants will accept this deal or continue to fight against the very structure of the card schemes and their fees.

On the surface, this looks like another legal loss for the schemes, however in reality the impact is insignificant as they had already set funds aside with the court to cover their share of the extra $900m in damages. Shares of both Visa and Mastercard rose between 1% and 2% in the day following the settlement announcement.

Additionally, many large merchants are expected to opt out of this new settlement in light of the ongoing case about card network rules, and the new settlement includes clauses based on the percentage of the class that opt out: if 25% of merchants (by volume) don’t take the settlement, then the defendants may terminate the agreement. An earlier settlement agreed in 2013 was valued at $7.25 billion but was reduced after many of the country’s largest merchants opted out, before eventually being thrown out by the court.

This case itself has had a series of twists and turns and was eventually divided into 2 key areas: monetary damages to merchants, and Visa and Mastercard business practices. This second area should now be the most important issue for merchants, as a win here could mean permanently reduced interchange fees rather than a relatively small monetary payment.

The fundamental issue here is about the network structure: not just money.

We will keep you informed as more details are known. In the meantime, if you have any questions please email Callum Godwin, CMSPI’s Chief Economist, at

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