Visa/Mastercard to Pay $199.5 million
Visa and Mastercard have agreed to pay a combined $199.5 million settlement to resolve a long-running class action lawsuit brought by U.S. merchants who accused the payment giants of unfairly shifting liability for fraudulent transactions. The case, filed in 2016, centered on allegations that Visa and Mastercard violated antitrust laws by colluding to modify chargeback and fraud liability rules tied to chip-enabled (EMV) payment systems.
The dispute emerged after the card networks changed their fraud rules, requiring merchants who had not upgraded to chip-card readers to absorb the costs of counterfeit and fraudulent transactions. Merchants argued that this sudden shift placed a disproportionate burden on small businesses, many of which faced significant costs to upgrade systems or pay chargeback fees.
Under the terms of the proposed settlement, Visa will contribute $119.7 million, while Mastercard will pay $79.8 million, according to court filings. Both companies have denied any wrongdoing but agreed to settle to avoid the expense and uncertainty of ongoing litigation. The settlement still requires approval by Chief U.S. District Judge Margo Brodie of the Eastern District of New York.
Plaintiffs’ attorneys hailed the settlement as a strong outcome, covering approximately 13% of the merchants’ maximum estimated damages and over 50% of a conservative estimate of losses. They also emphasized that the case underscores how major financial institutions can face accountability when they enact rules without adequate consultation or transparency.
This new agreement follows a separate, multibillion-dollar Visa and Mastercard settlement in 2019 over interchange (swipe) fees, which remains one of the largest antitrust settlements in U.S. history. The current settlement deals specifically with fraud liability shifts rather than transaction fees, marking another chapter in merchants’ long struggle against what they consider monopolistic practices in the payment card industry.
If approved, this deal could influence future class actions involving financial intermediaries and payment platforms, potentially setting a precedent for how liability is distributed in digital payment ecosystems.
Why It Matters
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Strengthens antitrust enforcement
— Demonstrates that even dominant financial networks can be held accountable under competition laws. -
Protects small businesses
— Offers financial relief to merchants unfairly burdened by fraud-related costs. -
Highlights accountability gaps
— Underscores how system changes can disadvantage merchants without regulatory oversight. -
Sets precedent for fintech litigation
— May shape future cases involving digital payment networks and platform liability. -
Signals corporate risk management trend
— Reflects growing preference among major companies to settle rather than risk unpredictable jury trials.
Key Legal Outcome
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Settlement approval pending
— The $199.5 million deal awaits review by Chief U.S. District Judge Margo Brodie for final approval. -
No admission of guilt
— Visa and Mastercard explicitly deny wrongdoing, consistent with prior settlements in related antitrust cases. -
Antitrust claims resolved
— The agreement effectively ends claims that the companies colluded to unfairly shift fraud costs. -
Legal precedent on liability
— The outcome may influence future judicial interpretations of liability distribution in financial networks. -
Class certification maintained
— The merchant class remains certified for the purposes of this settlement, ensuring broad participation and payout eligibility.
