Here’s what the Visa, MasterCard
suit settlement means to retailers

The class action notice (download 924k pdf) refers to a $3 billion settlement reached in April as the result of a lawsuit brought by Sears, Wal-Mart and other major retailers against Visa USA and MasterCard International, Inc.

All retailers who accepted Visa and/or MasterCard credit cards or debit cards for payment between October 25, 1992, and June 21, 2003, are members of the class—the group entitled to settlement funds—unless they actively opted out.

“While all members of the class are entitled to the settlement, and the total amount sounds large, several factors will mean that smaller retailers will receive very small amounts of the settlement money,” said MRA’s John Mayleben, vice president of marketing and sales.

First, and most importantly, payment will be prorated based on the number of transactions each retailer did with the card companies.

Large merchants, who make up one or two percent of the class but do most transactions with the card companies, may receive as much as 60 percent of the settlement money. The rest will be distributed on a prorated basis among the other 98 or 99 percent of the members.

Second, the payments will be spread over 10 years; for example, a retailer entitled to a total of $200 will see a check for $20 each year.

Third, settlements will be paid out of what is left after attorney fees, costs of notices and claims administration fees are paid.

More important to most retailers than the settlement money will be the rate changes—which will not be known for several months—and the choice retailers will have, beginning January 1, 2004, to accept the Visa or MasterCard branded credit cards without accepting their debit cards (and vice versa).

MRA will continue to follow this issue and will keep members informed about when and how best to handle the new costs and rules for processing.

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