Visa and Mastercard have agreed to pay merchants up to $6.2 billion to settle a years-long lawsuit over swipe fees. A similar agreement was rejected by a federal court in 2016.
Interchange, or swipe, fees vary depending on the transaction, but they typically amount to 2 percent of the purchase amount. Card companies use proceeds from interchange fees to fund rewards and cash back that customers earn on credit card purchases.
The settlement replaces a 2012 agreement under which the card networks would pay retailers $7.25 billion in compensation for swipe fees. It also allowed retailers to impose surcharges to cardholders of up to 4 percent for Visa and Mastercard transactions.
But that settlement was winnowed down to $5.7 billion after several retailers opted out, and it was ultimately rejected by a federal appeals court in 2016.
The lawsuit, which was filed in 2005 and included about 12 million merchants, alleges that the card networks’ swipe fees are too high and violate antitrust laws.
The new settlement only addresses the monetary damages aspect of the case – it does not cover the networks’ swipe fee policies – and it still must be approved in court.