Credit card companies and major US Banks agree to a $7.25 bn settlement over card fees

Credit card companies Visa and Mastercard and major US banks have agreed to a $7.25 billion settlement to retailers over card fees.

The case, which has been going on for seven years, is over firms colluding to fix the fees that stores pay to process credit and debt card payments.

The settlement is thought to be the largest of its kind in US history.

It involves a $6 billion payment to stores and an agreement to reduce swipe fees for eight months, valued at $1.2 billion.

An additional $525 million has been set aside to pay to the stores which sued individually, including grocery chains Kroger and Safeway and the Rite Aid pharmacy chain.

The settlement involves credit card giants Visa and Mastercard, as well as major US banks which issue their cards including JPMorgan Chase, Bank of America and Citibank.

Craig Wildfang, the lead lawyer representing the merchants, told AFP: “Over time, the reforms induced by this case and in this settlement should help reduce card-acceptance costs to merchants, which in turn, will result in lower prices for all consumers.”

Visa and Mastercard already paid a combined $3 billion to settle a lawsuit over their “honor all cards” policies, which tied acceptance of credit to debit cards.

The US Department of Justice also brought and settled a civil suit against the two firms in 2010 over policies that prevented stores from offering their customers cheaper forms of payments.

However, that settlement left in place credit card company rules that stop stores from charging customers more when they use certain payment cards.

Lawyers representing the credit card companies said Friday’s settlement was in the best interests of all involved.

Visa and Mastercard stock both climbed in after-hours trading following the announcement of the deal.