Visa and Mastercard have agreed to a $199.5 million settlement resolving a long-running class action by merchants accusing the card companies of antitrust violations in how they handled chargeback rules.
The lawsuit, filed in 2016, alleged that Visa and Mastercard colluded to change their rules governing fraudulent transactions, forcing merchants—particularly those without updated chip-enabled (EMV) point-of-sale systems—to absorb the costs of disputed or fraudulent purchases involving lost, stolen, or counterfeit cards.
Under the proposed settlement, Visa will pay $119.7 million and Mastercard $79.8 million. In previous rounds of this litigation, Discover and American Express had already settled similar claims for a combined $32.2 million.
The settlement awaits approval by Chief U.S. District Judge Margo Brodie in Brooklyn. The parties describe this as a resolution that avoids further litigation risks, even while denying any wrongdoing.
Plaintiffs’ counsel call the settlement “an excellent outcome” for the merchant class. The deal covers approximately 13% of the merchants’ upper estimate of damages and over 50% of a more conservative damage estimate.
This settlement is separate from a prior, larger antitrust settlement between Visa, Mastercard, and merchants (involving swipe or interchange fee claims) that resulted in a multibillion-dollar resolution in 2019.
Merchants and payment industry observers will closely watch whether this settlement prompts further challenges to dominant card networks’ rules and how courts balance liability, denials, and the structural constraints of major financial platforms.
Why It Matters
Relief for merchants burdened by fraud costs
— Many small and medium merchants will recoup part of the financial losses they were forced to absorb under earlier chargeback regimes.
Precedent for rule changes in card networks
— The case may pressure networks to adjust chargeback, fraud liability, and system upgrade rules more equitably going forward.
Reinforces oversight of dominant platforms
— It signals judicial willingness to rein in large financial intermediaries when rules shift costs onto weaker parties.
Risk mitigation for lengthy litigation
— The settlement avoids years more of discovery, motion practice, and trial risk for both merchants and card firms.
Impact on future class actions in fintech
— The structure and outcome may influence how future merchant, bank, or fintech litigation is framed against payment networks.
Key Social Outcome
Empowerment of merchant community
— The settlement strengthens merchant confidence that large financial intermediaries can be held accountable and that collective action can yield results.
Public scrutiny of opaque financial rules
— Greater attention is drawn to how card network rules — typically invisible to ordinary consumers — actually shift financial risk and costs to small businesses.
Trust issues in payments landscape
— Some merchants may feel more wary of future upgrades or system changes, asking whether the costs they incur might again be transferred to them.
Consumer impact & price adjustments
— If merchants absorb fewer unexpected cost shifts, there’s potential for more stable pricing or less surprise fee passthroughs to customers.
Narrative shift in power dynamics
— The deal highlights the tension between dominant financial platforms (Visa, Mastercard) and the many participants (merchants) in the payment ecosystem, contributing to broader conversations about fairness, equity, and structural reform.
