BAC Bank of America Corporation

By Kimberly Chin 

Mastercard Inc., Visa Inc. and other financial institutions have agreed to settle a long-running antitrust lawsuit with merchants over the fees they pay when they accept card payments for a proposed settlement amount of about $6.2 billion.

The proposed amount includes $900 million from all of the defendants, including a number of banks that issue debit and credit cards, including JPMorgan Chase & Co., Citigroup Inc., and Bank of America Corp. It also includes roughly $5.3 billion already paid by the defendants as part of a $7.25 billion settlement reached in 2012.

Visa's share of the new settlement is $600 million, which it said it set aside for the settlement on June 28. Including the 2012 settlement money, Visa's share is $4.1 billion.

Mastercard has agreed to pay an additional $108 million on top of the $790 million it had agreed to pay in a settlement in 2012.

The merchants also allege that the card networks have intentionally set fees and card acceptance rules that primarily benefit the banks. The merchants argue that they want the ability to negotiate their own fees directly with the banks instead of through card networks like Visa and Mastercard, which settle the fees with the banks independently.

The defendants involved in the case said that part of the suit that seeks to revise network rules isn't covered by Tuesday's settlement and won't result in any immediate action while the parties engage in negotiations.

The settlement Tuesday, which was originally reported by The Wall Street Journal in June, would still be subject to court approval.

This could cap a long-running class-action lawsuit that was brought by merchants in 2005 against Visa, Mastercard and the largest U.S. card-issuing banks.

When the original $7.25 billion settlement was reached in 2012, many large merchants opted out largely due to terms that would have barred them from filing lawsuits against the networks over future swipe-fee increases. An appeals court invalidated that settlement on the grounds that merchants weren't adequately represented. The Supreme Court last year declined to hear the case, shifting it back to the district court.

In this case as well, Mastercard and Visa said they expect to be relieved of all future monetary claims alleged by the class-action suit related to the company's interchange and fee structure, as well as merchant acceptance rules for at least a period of five years after resolution of appeals.

The card networks have come under scrutiny in particular over the fees they charge merchants when a consumer swipes a card, known as interchange fees, after each transaction. The card networks set the fee and the merchants pay the banks. Yet the merchants in the suit allege that the networks and banks have colluded to inflate those fees.

Write to Kimberly Chin at kimberly.chin@wsj.com

(END) Dow Jones Newswires

September 18, 2018 08:38 ET (12:38 GMT)

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