The card companies and banks would also allow stores to start charging customers extra for using certain credit cards in an effort to steer them toward cheaper forms of payment.
The retailers claimed Visa, MasterCard and the banks conspired to fix the fees that stores pay to accept credit and debit cards.
It has about $4.28 billion in that escrow, which is funded by a separate class of shares held exclusively by US banks that issue Visa cards.
The card companies have also agreed to reduce swipe fees for eight months, valued at approximately $1.2 billion, according to lawyers for the plaintiffs.
The suits name Visa, MasterCard and numerous large banks that issue their cards, accusing them of conspiring over merchant fees.
An additional $525 million will be paid to stores suing individually, according to the documents.
“This is an historic settlement,” said Bonny Sweeney, a lawyer for the plaintiffs.
” In addition to refunding billions of dollars to retailers that paid artificially inflated interchange fees, the reforms will create real price competition, leading to reduced card acceptance fees for retailers.”.
Noah Hanft, general counsel for Mastercard, said the company believed its interests were “best served by an amicable resolution” to the case.
Visa Chief Executive Officer Joseph Saunders said the settlement was in the best interest of all parties and did not expect the settlement to impact its current guidance.
Throughout the world, its principal business is to process payments between the banks of merchants and the card issuing banks or credit unions of the purchasers who use the “MasterCard” brand debit and credit cards to make purchases.
One class plaintiff, the National Association of Convenience Stores, slammed the deal in a statement from its president, Tom Robinson, who is also president of Robinson Oil Corp.
They are set by card processing networks but collected by, and split with, the banks that issue the cards.
The changes were meant to reward merchants who continue routing transactions over Visa’s network, given the rules allow retailers more ability to route over competing networks as a way to lower their costs.
Visa and Mastercard have been plagued by legal woes over their payment card policies for the last decade.
We are now starting phase two with credit and debit cards.
The US Department of Justice brought and settled a civil antitrust suit against Visa and Mastercard in 2010.
As part of the consent decree, the companies agreed to drop certain policies that kept stores from steering their customers to cheaper forms of payment.
But the decree left intact policies that prohibit stores from charging customers more when they use certain payment cards, according to a July 2011 court filing from plaintiffs.
In December, Visa announced it had set aside an additional $1.57 billion to cover the cost of a potential settlement in the case, bringing its litigation reserve balance to $4.28 billion, according to a regulatory filing.
Mastercard in the fourth quarter of 2011 recorded a $770 million pretax charge, as an estimate of its potential liability in the case, a filing with the US Securities and Exchange Commission showed.
Visa and Mastercard together accounted for more than 80 percent of US credit and debit card purchases by volume in 2011, according to data from the Nilson Report, a California trade publication.
The case is In re: Payment Card Interchange Fee and Merchant Discount Antitrust Litigation, in the US District Court for the Eastern District of New York, no.
Michael Johnson is a business journalist based in New York, US. Michael has a passion for financial markets and breaking news stories and loves writing about business news, stock market, and economic opinions that matters most to its audience. Michael spends a lot of time discovering and researching latest financial markets and industry news stories in order to make sure the latest and greatest stories are brought to you first on BigBoardNews.com.