(Reuters) – Visa Inc, Mastercard Inc and banks issuing their credit cards have agreed to a settlement valued at $7.25 billion and will allow stores to encourage customers to use cheaper forms of payment, according to settlement papers filed on Friday in a lawsuit in Brooklyn federal court.
Merchants Reach Landmark $7.25 Billion Settlement with Visa, MasterCard and Major U.S. Banks for Alleged Anticompetitive Practices and Price Fixing In Setting Interchange FeesJuly 13, 2012
MINNEAPOLIS, July 13, 2012 /PRNewswire via COMTEX/ — Robins, Kaplan, Miller & Ciresi L.L.P. has reached an historic $7.25 billion settlement on behalf of a class of approximately seven million merchants in the United States who accept Visa and MasterCard credit cards and debit cards. The settlement is with payment card networks Visa and MasterCard and with card-issuing banks, including JPMorgan Chase, Bank of America, Citibank, Wells Fargo, Capital One and other major banks.
Robins, Kaplan, Miller & Ciresi L.L.P. filed the case in 2005, and was appointed by the United States District Court for the Eastern District of New York, along with two other law firms, to represent the class in the case. The settlement that has now resolved the case is believed to be the largest ever settlement of a private antitrust case under the Sherman Act (15 U.S.C. section 1 et seq.).
The settlement terms include a cash payment and significant reforms of Visa and MasterCard rules and business practices. The cash component of approximately $7.25 billion consists of a payment for alleged past damages in the amount of $6.05 billion, and a further payment representing the value to merchants of a temporary reduction in the level of interchange fees paid by merchants on Visa and MasterCard credit card transactions, estimated to have a value of $1.2 billion. The reforms of rules and business practices include modifications of network rules previously enforced by Visa and MasterCard relating to activity at the point-of-sale, as well as a new requirement that Visa and MasterCard negotiate with merchant-organized buying groups. The modification of these network rules will provide additional value to merchants of many billions of dollars by enabling merchants to provide greater transparency to consumers regarding the cost of using various types of payment methods, and permitting merchants to negotiate collectively over interchange fees and other aspects of their relationships with Visa and MasterCard. It is expected that the reforms required by the settlement will enable merchants to put pressure on Visa and MasterCard to limit or reduce interchange fees, among other things.
“The reforms achieved by this case and in this settlement will help shift the competitive balance from one formerly dominated by the banks which controlled the card networks to the side of merchants and consumers,” states K. Craig Wildfang, who led the case for the Class Plaintiffs as co-lead counsel and partner at Robins, Kaplan, Miller & Ciresi L.L.P. “Over time, the reforms induced by this case and in this settlement should help reduce card-acceptance costs to merchants, which in turn, will result in lower prices for all consumers.”
Martin R. Lueck, Chairman of the Executive Board at Robins, Kaplan Miller & Ciresi L.L.P. adds, “These reforms go a long way to achieving price transparency for the most heavily used form of payment in the United States, which will benefit consumers.”
“As an ecommerce business who has to rely on credit cards, this historic settlement and the reforms it brings will provide both immediate and lasting benefits for small merchants,” states Mitch Goldstone, President & CEO of ScanMyPhotos.com, a division of Photos Etc. Corporation.
The case is In re Payment Card Interchange Fee and Merchant Discount Litigation, 05-MD-1720 (JG)(JO). The other two co-lead counsel law firms that represent the class of merchants are Berger & Montague, P.C. and Robbins Geller Rudman & Dowd LLP.
About Robins, Kaplan, Miller & Ciresi L.L.P.
Robins, Kaplan, Miller & Ciresi L.L.P. ( http://www.rkmc.com ) is one of the top trial firms in the country. The firm’s clients include numerous Fortune 500 corporations, emerging markets companies, entrepreneurs, and individuals as both plaintiffs and defendants. Robins, Kaplan, Miller & Ciresi L.L.P. is frequently engaged in high-stakes, complex litigation with significant bottom-line implications for their clients, and the business lawyers handle complex transactions in a variety of market segments. The firm has more than 250 lawyers located in Atlanta, Boston, Los Angeles, Minneapolis, New York and Naples (FL).
Robins, Kaplan, Miller & Ciresi L.L.P. received The National Law Journal’s 2011 Pro Bono Award and was selected as a Pro Bono Firm of 2010 by Law360. The American Lawyer ranked the firm eighth in the country in the 2011 Pro Bono Survey, and twice named the firm to the A-List (2007 and 2004). The firm has regularly received a top ranking for litigation from Chambers USA and was chosen as a “Go-To Law Firm” by Corporate Counsel.
SOURCE Robins, Kaplan, Miller & Ciresi L.L.P.
Visa Inc. spent $1.69 million in the third quarter to lobby the federal government on the regulation of debit card fees charged to merchants and other issues, according to a disclosure report.
The dust has barely settled over the debit card fee-flap but there’s more news from the big banks regarding fees. The good news is that it’s not all bad this time — both Bank of America and Chase have abandoned fees that were under consideration or in the testing phase. Meanwhile, though, banks are quietly calculating which other ones can take their place.
Debit Card Fee Debacle: Big Banks Could Lose $185 Billion In Deposits Next Year. #SwipeFees (Huff Post)November 22, 2011
The top 10 retail banks are projected to lose $185 billion in deposits over the next year if they dont address consumer concerns, according to a recent study from cg42, a firm that consults with banks. Bank of America, Citibank, JPMorgan Chase and Wells Fargo account for nearly three-quarters of the loss, the study found.
Call for antitrust investigation
A day after the anti-Durbin bill was introduced, congressional Democrats asked Attorney General Eric Holder to consider an anti-trust investigation of financial institutions on grounds they are colluding to create new fees to cover losses related to the Durbin Amendment’s debit interchange fee cap.
On Oct. 13, 2011, five Democratic congressmen led by Chief Deputy Whip Peter Welch, D-Vt., wrote Holder asking for the anti-trust investigation of “big banks [that] are coordinating their fee strategies in violation of federal anti-trust laws.”
For years, banks have had an arsenal of fees they could charge consumers to increase revenues, said Ed Mierzwinski, consumer program director of U.S. Public Interest Research Group, which published a report, Big Banks, Bigger Fees, earlier this year.