Credit card lawsuit: Visa and MasterCard penalized over debit card fee

By Jeremy M. Simon

Visa USA and MasterCard are set to pay the federal government a total of $3.5 million as part of an 11-year-old court struggle that saw retailers square off against Visa and MasterCard in a battle over debit card fees.  A settlement fund will provide $3.7 million.

Plaintiffs in the class-action lawsuit settled the case in 2003, but the government only submitted a claim in February 2006.  In turn, that claim became the focus of a separate confrontation when lawyers for the plaintiffs charged that the U.S. was not entitled to a portion of the $3 billion settlement fund that was established for retailers.

With its decision to file a claim, the government basically alleged that it shared the pain felt by U.S. retailers over Visa and MasterCard rules that forced merchants to take their branded debit cards if they also accepted Visa and MasterCard credit cards. 

Credit cards and debit cards are accepted at a wide variety of government facilities -- from military post exchanges to the Smithsonian Institution's gift shop.   

Visa and MasterCard indicated their satisfaction over the fact that a settlement had been reached.

Published: January 9, 2007

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