A federal judge on Friday granted preliminary approval to a $7.25 billion class action settlement that would require Visa, MasterCard and some of the largest U.S. banks to compensate retailers for alleged overcharges, rejecting opposition from plaintiffs.
The settlement, which was announced in July, followed a seven-year legal battle between the parties. Retailers allege that the two largest payment networks colluded with banks to maintain higher credit card interchange fees.
Under the settlement, not only would the banks and credit card companies be required to pay an estimated $6.05 billion to retailers, Visa and MasterCard would be required to reduce interchange fees for eight months by an amount equal to $1.2 billion. Merchants would also be permitted to assess a surcharge on credit card transactions.
In October, a majority of plaintiffs in the case indicated they would be opposing the settlement. With class actions, affected parties have time to oppose the settlement before it is final.
During a hearing Friday, U.S. Judge John Gleeson said those objections were “overstated.” The National Retail Federation, which represents hundreds of merchants including Walmart and Target, subsequently issued a statement saying it examine every option it has to prevent the deal from getting final approval.