Visa Inc. and Mastercard Inc. are getting close to settling a 13-year-old lawsuit over fees charged when merchants accept card payments, according to a person familiar with the agreement
The two card companies and banks including JPMorgan Chase & Co., Citigroup Inc. and Bank of America Corp. would pay merchants about $6.5 billion under the terms of the settlement, the person said, asking not to be identified because the deal hasn’t been made public.
Mastercard said in a filing that it will boost its reserves by $210 million this quarter “as a result of advances in negotiations related to the monetary damages claims.” Visa didn’t immediately respond to an email seeking comment. Earlier this week, the company said in a filing it had added $600 million to its litigation escrow account.
The Wall Street Journal reported the agreement earlier Thursday.
The lawsuit, brought on behalf of 12 million merchants nationwide, was filed more than a decade ago after earlier disputes over the fees. A federal appeals court in 2016 rejected a $5.7 billion settlement of the claims, which centre on whether the card companies improperly fixed credit-card swipe fees.
Visa rose 0.1 per cent to $131.18 at 10:17 a.m. in New York, while Mastercard advanced 0.7 per cent to $194.51.
The $90 billion-a-year swipe-fee industry is a profit centre for many financial firms and has been under attack from all angles. The Dodd-Frank Act earlier this decade limited the amount of interchange banks could charge on debit-card transactions. Major retailers are exploring ways to get consumers to keep money with them to cut down on swipe fees. And fintech start-ups are attempting to be cheaper alternatives for merchants.
Once owned by groups of major banks, Visa and Mastercard had defended themselves for decades against legal claims that they operated price-fixing schemes. Swipe, or interchange, fees are set by card companies and paid by merchants when consumers use credit or debit cards.