NEW YORK—Visa and Mastercard have agreed to pay a combined $199.5 million to resolve a class-action lawsuit alleging the card networks colluded to make merchants absorb a larger share of fraud-related costs, Reuters reported.
The proposed settlement, filed in federal court in Brooklyn, awaits approval from Chief U.S. District Judge Margo Brodie. The case, first brought by merchants in 2016, claimed the two payment giants violated antitrust laws by coordinating rule changes around chargebacks—reversed payments stemming from disputed transactions involving counterfeit, lost, or stolen cards. Plaintiffs argued the changes unfairly shifted liability to businesses without lowering interchange or transaction fees, Reuters explained.
Under the new framework, merchants became liable for chargebacks if they had not upgraded point-of-sale systems to accept chip-enabled cards.
Visa said it will pay $119.7 million, and Mastercard will pay $79.8 million, according to the settlement. Two other defendants, Discover and American Express, agreed earlier to pay a combined $32.2 million to resolve the merchants’ claims against them, Reuters said.
All four companies denied any wrongdoing in agreeing to settle the class action.