$6 Billion Visa, MasterCard Settlement Final; How to Claim

Last month, the U.S. District Court for the Eastern District of New York approved a settlement in a class-action lawsuit between merchants (as plaintiffs) and Visa, MasterCard and other defendants.

The case started in 2005 by retailers that objected to the processing rates set by Visa, MasterCard, and others. The ensuing lawsuit claimed that merchants paid excessive fees for accepting Visa and MasterCard because of an alleged conspiracy among the defendants.

In a 55-page ruling, U.S. District Judge John Gleeson said the settlement will encourage competition. I do not feel the settlement went far enough in adding transparency, preventing rate creep, and policing the misleading tactics used by some providers.

Who Can File a Claim?

The monetary portion of the settlement is broken down into two funds.

  • For the first fund, any person, business, or other entity that accepted Visa or MasterCard credit or debit cards in the U.S. between January 1, 2004 and November 28, 2012 may be eligible to receive a payment. The preliminary settlement (in November 2012) called for the defendants to pay an estimated $7.25 billion. The settlement is now valued at $5.7 to $6.0 billion as some of the largest retailers in the U.S. chose to opt out possibly because accepting the settlement could put limitations on future lawsuits against the defendants.
  • The second fund is based on a portion of interchange fees incurred by certain merchants that accepted Visa or MasterCard for an eight-month period which began July 29, 2013.

Official Settlement Website

The purpose of this article is to briefly provide Practical Ecommerce readers with information on the settlement. However, I encourage you to visit the official website set up for this settlement — — regularly to learn more about the settlement and how to file a claim.

Payment Card Interchange Fee Settlement

Visit the official settlement website for updates and claim information.

The claim forms have not yet been approved by the court nor has the deadline for filing them been determined. However, claim forms will be mailed once the court approves it and determines when the claim form needs to be sent to settlement participants. The official website is your best source of information going forward.

Provider and Third Party Offers to File Your Claim

Some merchant account providers have already notified their merchants that they will automatically file the claim for the merchant unless the merchant tells them otherwise. I have seen some provider notices and their fees range from 15 to 25 percent of the merchant’s settlement portion. In addition, I have seen some provider notices state they will charge a fixed fee (say $25) on top of the percentage they take.

There may be a convenience in having the provider file the claim. However, some of the provider notices I read felt like the provider was more interested in receiving windfall revenue than in servicing their merchants. I suggest that merchants determine how difficult the claim process will be before allowing their provider or any third party process the claim for a fee.

Another Important Note

As part of the preliminary settlement in November 2012, Visa and MasterCard were required to allow merchants to surcharge certain credit card transactions beginning January 27, 2013. The surcharge was called a “Checkout Fee.”

The checkout fee is a surcharge of up to 4 percent, which merchants can add to the sale to cover credit card processing costs. The checkout fee cannot be added to debit card or prepaid card transactions.

Now that the settlement is finalized, merchants need to be careful as some providers and salespeople may use the checkout fee as a way to manipulate savings analyses or convince merchants to change providers. I do not believe that surcharging will benefit most merchants. In fact, it can cause more harm than good for merchants. Also, keep in mind that surcharging is not allowed in all states and Visa and MasterCard have very strict rules on surcharge signage and other aspects associated with surcharging. Read my January 2013 article “U.S. Merchants Can Now Charge for Credit Card Transactions” for more details.


  • The suit against Visa, MasterCard, others has been finalized.
  • You must file a claim to be paid.
  • Use the official website as the source of information.
  • Understand the claim process before allowing a third party to file for you.
  • Be careful with surcharging.
Phil Hinke
Phil Hinke
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