Visa and Mastercard pay $199.5 million – who benefits now?

Visa and Mastercard pay $199.5 million – who benefits now?

Visa and Mastercard have agreed to pay $199.5 million to settle a class action lawsuit that has been pending since 2016. The lawsuit accuses the two credit card companies of forcing companies to cover the costs of fraudulent transactions caused by counterfeit, lost or stolen cards. This legal battle has also raised allegations of antitrust violations as the companies allegedly made coordinated changes to their chargeback policies.

These changes, according to the plaintiffs, resulted in increased costs for merchants without reducing transaction fees. Merchants hesitant to upgrade their point-of-sale systems to the latest chip-enabled cards faced additional costs. The agreement calls for Visa to pay $119.7 million and Mastercard to pay $79.8 million. In addition to the two giants, Discover and American Express have also reached an agreement for $32.2 million. However, all four companies deny any wrongdoing.

Background of the lawsuit

The class action lawsuit against Visa and Mastercard raises concerns about the business practices of the major credit card providers. The allegations come at a time when many merchants were struggling to keep up with changing payment processing needs. Particularly problematic were the changes that were introduced without prior notice or adjustment periods, which put many smaller companies under pressure.

No exact details have been released yet as to how retailers will receive their share of the settlement. This remains an important aspect as many affected companies rely on the payouts. The historicity of this lawsuit and the multitude of allegations continue to give the industry hope for possible changes in the regulatory environment.

The agreement could potentially impact future payments business models and strategies, particularly in the way credit card companies set their terms and conditions and treat merchants. While the proceedings are completed, it remains to be seen how the affected traders react to the results and whether this will lead to lasting changes.

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