Visa, MasterCard and several major banks agreed to pay $6 billion to US retailers to settle a long-running price-fixing lawsuit that alleged card issuers conspired to overcharge retailers by billions of dollars in credit-card transaction fees.
According to lawyers for 7 million US retailers who filed the suit in 2005, the agreement reached yesterday is the largest-ever settlement in a private antitrust case in the US.
The plaintiffs include grocery chains Kroger, Walgreen Co and Safeway, the Rite Aid drugstore chain and the TV and online shopping network QVC among others, while the defendants are most of the major banks including JPMorgan Chase, Bank of America and Citibank, and the two credit card issuers.
The retailers had alleged that Visa, MasterCard and all the major banks conspired to fix the fees the retailers paid to accept credit and debit cards, which depend on the type of store and the type of card issues, average to about 2 per cent of the purchase price.
Retailers pay Visa and MasterCard for each customer that uses the credit or debit cards known as "swipe" or "interchange" fees for their purchases, and the fees, which are set by card processing networks, are split with the banks that issue the cards.
Credit card companies have long argued that customers tend to spend more while using the credit or the debit card compared to cash or cheques.