(RTTNews.com) - Visa Inc. (V) and Mastercard Inc. (MA) are close to settling a long-running antitrust lawsuit with merchants over the fees they pay when they accept card payments, the Wall Street Journal reported citing people familiar with the matter.
As per the settlement, Visa, Mastercard and a number of banks that issue debit and credit cards including JPMorgan Chase & Co. (JPM), Citigroup Inc. (C), and Bank of America Corp. ( BAC ) would pay the merchants around $6.5 billion, the report said. It is not clear how the payment would be split up among the card networks and the issuing banks.
The parties on Tuesday informed the U.S. District Court for the Eastern District of New York that they reached a settlement, the report said. They intend to draw up a draft of the deal by mid-July and to submit a final agreement to the court by mid-August, the report added.
Merchants first brought the class-action suit in 2005 against Visa, Mastercard and the largest U.S. card-issuing banks. But many large merchants opted out of the original settlement of $7.25 billion that was reached in 2012 largely due to terms that would have barred them from filing lawsuits against the networks over future swipe-fee increases. An appeals court invalidated that settlement on the grounds that merchants weren't adequately represented. The Supreme Court last year declined to hear the case, shifting it back to the district court.
Around $5 billion of the original settlement amount remained in escrow, according to people familiar with the matter, and would be distributed as part of the new settlement if it is approved by the court.
Merchants that agree to the settlement will be restricted for a number of years from suing the card networks over the same card-swipe-fee claims the suit addressed, according to people familiar with the matter. Merchants who disagree with the terms of the settlement will be able to opt out and proceed with their own lawsuits against the networks, the Journal said.
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