Small businesses can benefit from the historic Visa and Mastercard class action settlement, regarding alleged violation of antitrust legislations in the United States. These types of laws were created to ensure that consumers and businesses have the right to a competitive industry, instead of the dominance of one or a couple of important companies, an antitrust lawsuit filed by American merchants claimed that Visa and Mastercard determined very high fees for swiping cards, which affected business.
This is the charge that is applied to merchants for receiving credit or debit card payments from merchant customers. Typically, companies are charged 2% of each transaction in swipe fees, but premium reward cards can charge up to 4%, according to industry estimates.
What the Plaintiffs Say Visa, Mastercard Did to Them
The lawsuit argued that the card companies and the banks that generate them worked together to increase swipe fees for businesses and prevented merchants from recommending other cheaper payment methods to their consumers.
Although they said they had not acted improperly, the credit card networks reached an agreement to settle the claims, paying at least $5.6 billion dollars, the agreement includes all individuals, companies, or entities in the United States that obtained Visa and/or Mastercard credit or debit cards between January 1, 2004 and January 25, 2019.
Even companies that are no longer in operation, are bankrupt or have changed owners, can make the claim. In addition to paying, both networks are going to have to proceed with changes, such as minimizing swipe fees by at least 0.04% for at least three years.
The Cost of Swipe Fees for Small Businesses
The card companies reached an agreement to keep the swipe fees at the same rate they had on December 31, 2023 until 2028, Visa and Mastercard will also remove anti-competitive restrictions that limit merchants to advise customers with cheaper card options.
In May, a New York court approved an extension of the deadline so that those who wish to make a claim on the agreement can do so.
The 90-day extension set the new deadline for the most significant antitrust class action settlement in the country’s history for August 30, 2024.
“This extension helps all eligible businesses, and in particular small businesses, which often have limited resources, by giving them more time to take action,” a press release about the extension stated.
“We really hope merchants will take advantage of the extra time they have,” Ryan Marth, one of the lead attorneys for the merchant group, said, according to Payments Dive.
“This is real money for real companies.”
There are only a few weeks left for them to make the claim, companies should not worry if they did not receive a claim form by mail.
Those people who believe that they are eligible can enter the settlement claims portal and confirm their identity using a Tax Identification Number and then follow the steps to make the due claim.
What Is a Class Action Lawsuit and How Does It Work?
A class action is a civil lawsuit brought on behalf of a group of people or business entities who have suffered common injuries as a result of the defendants’ conduct, in which at least one person or entity acts as a representative of that group.
While the issues in a class action lawsuit may vary, the issues in dispute are common to all class members. Class actions can be filed in state or federal courts. If the case involves federal laws, then the federal court is the appropriate jurisdiction.