NEW YORK, N.Y. (12/16/13)--A $5.7 billion class action interchange suit was approved on Friday by U.S. District Judge John Gleeson in the Eastern District of New York, Brooklyn.
The settlement is the largest private antitrust damages recovery in U.S. history. The approved settlement follows a 2008 suit in which merchants alleged MasterCard and Visa set artificially high credit card interchange fees.
The settlement requires a reduced interchange rate fee (IRF) of 10 basis points for an eight month period. The reduced fee will apply to all card issuers, including credit unions.
If the total credit IRF reduction is $1.2 billion, credit unions with credit card programs would lose about $50 million in total revenues, or about 0.5 basis points on their total assets, the Credit Union National Association said. The loss would be concentrated among a relatively small number of credit unions with very active credit card programs.
The approved settlement also calls for Visa, MasterCard and the banks to create a fund to repay retailers for past fees charged and says retailers would be permitted to assess "check out" fees or surcharges on credit card purchases, which has previously been prohibited by Visa and Mastercard rules.
Some merchants have indicated they will opt out of the approved settlement.
About 216 merchants in August filed a separate antitrust lawsuit in a Marshall, Texas, U.S. District Court against Visa and MasterCard, claiming the card companies' policies force them to pay hundreds of millions of dollars in excess interchange fees. That suit seeks unspecified damages, along with punitive damages and attorneys' fees.