Last month, Visa and MasterCard agreed to refund merchants $6.6 billion and reduce interchange fees — the amount a bank charges a merchant to process a debit transaction — to settle what could be the largest antitrust lawsuit in U.S. history, BusinessWeek reports.
The settlement includes $6.05 billion in payments to merchants involved in the class action suit, as well as $525 million in payments to individual plaintiffs, though the larger amount could be reduced if some merchants don’t agree to the settlement, American Banker reports.
The Durbin Amendment, named after Sen. Dick Durbin (D-Ill.), cut interchange fees by almost 50 percent and resulted in a $8 billion annual revenue hit for U.S. banks. Durbin’s office told merchants that efforts to reduce credit card swipe fees could be jeopardized if they support the settlement.
“This is going to foreclose the prospect of good legislation for the foreseeable future,” Dan Swanson, the senior judiciary council for Durbin, said, according to BusinessWeek. “It will essentially be game over.”
Swanson also said that “merchants had better be sure this is going to fix the interchange problem,” but Durbin said that it would not.
“The settlement does nothing to change the anticompetitive fee-fixing that Visa and MasterCard do on behalf of their member banks,” Durbin said, BusinessWeek reports. “In fact, it gives Visa and MasterCard broad and permanent legal immunity to continue doing exactly that in the future.”
Bank of America is also party to the settlement and is set to pay out a total of $738 million. Citigroup said in a filing earlier this month that second quarter expenses rose by five percent due to a boost in litigation-related reserves tied to the lawsuit, according to American Banker.