Deadline Extended for Merchants to Claim Payouts from Visa & Mastercard Swipe Fee Settlement

­­­Merchants across the United States have been granted additional time to file claims in a monumental $5.5 billion settlement with Visa and Mastercard. The deadline to submit claims has been extended from May 31 to August 30, 2024, providing a crucial window for businesses to seek compensation for allegedly excessive interchange fees charged over a 15-year period. With the new deadline in place, it is essential for eligible businesses that haven’t yet submitted a claim to understand the process and act promptly to ensure they receive their share of the settlement.

Background

The Visa-Mastercard settlement originates from a lawsuit filed in 2005, where merchants alleged that Visa and Mastercard, along with their member banks, had violated antitrust laws by charging exorbitant interchange fees. The plaintiffs argued that the fees were inflated due to anti-competitive practices by Visa and Mastercard.

The legal battle spanned nearly two decades, with Mitch Goldstone, CEO of ScanMyPhotos.com, serving as one of the lead plaintiffs. The case saw numerous legal maneuvers and extensive negotiations, culminating in the current $5.5 billion settlement. Despite the significant financial restitution, Visa and Mastercard have not admitted to any wrongdoing as part of the agreement. The settlement was upheld by the Court of Appeals for the Second Circuit in March 2023, marking a critical victory for the merchants involved.

Settlement Details

The settlement agreement, totaling $5.5 billion, aims to compensate merchants for the excessive interchange fees they were charged. As part of the settlement, the court established the Rule 23(b)(3) Settlement Class, which includes all persons, businesses, and other entities that accepted Visa-branded or Mastercard-branded cards in the United States between January 1, 2004, and January 25, 2019. This includes not only active businesses but also those that have since closed, gone bankrupt, or changed ownership.

There are some exclusions from this class. These include:

• The Dismissed Plaintiffs, who are those that previously settled and dismissed their own lawsuit against a defendant.
• The United States government.
• Named defendants in this action, including their directors, officers, or family members.
• Financial institutions that issued Visa or Mastercard cards or acquired Visa or Mastercard transactions during the specified period.

For those uncertain about their eligibility, especially regarding whether they fall under the Dismissed Plaintiffs category, assistance is available through a dedicated helpline and an online resource listing all Dismissed Plaintiffs.

With the extended deadline now set for August 30, 2024, eligible merchants have additional time to review their eligibility status and submit a claim for compensation. This extension offers a renewed opportunity for businesses to seek restitution for alleged overcharges and reclaim a portion of the $5.5 billion settlement fund.

Filing a Claim

There are multiple avenues available for merchants to submit their claims:

1. Online with a QR Code: More than 18 million businesses received claim forms by mail last year. Business owners can simply scan the QR code on the claim form and access a personalized, secure page in the claims portal pre-filled with relevant business information. Merchants using this option should check to ensure the pre-filled information is up to date.
2. Online with a Tax Identification Number (TIN): For businesses without a claim form, the claims portal allows them to use a TIN to confirm their identity and proceed with the claims submission process. It's essential to have documentation ready to demonstrate authorization to file a claim on behalf of the business.
3. By Mail: Alternatively, merchants can opt to submit their claims by mail. Detailed instructions for this method can be found on the claims website.

The claims process is designed to be user-friendly and efficient, with online submission taking as little as five minutes. However, it's crucial for merchants to act promptly and ensure their claims are submitted before the August 30 deadline. Only businesses that file a claim by the deadline will be eligible to receive compensation from the settlement.

Payout Information

There is no set amount for individual payouts, as they will vary depending on the specific circumstances of each merchant. The amount of compensation each business receives will be calculated after all claims have been filed and validated.

Payouts will depend on the total value of eligible payment card transactions and the number of claims received, among other factors. Amounts could range from a few dollars for small businesses to hundreds of thousands for large corporations, reflecting the diverse nature of businesses affected by the interchange fees.

With the potential for substantial payouts, merchants are encouraged to take advantage of this opportunity and submit their claims before the August 30 deadline to secure their rightful share of the settlement funds.

The Future of Interchange Fees

This settlement isn’t the only recent shakeup in the world of interchange fees. On March 26, 2024, Visa, Mastercard, and the banks affiliated with them reached a separate settlement in another decades-long antitrust case brought forth by merchants.

As part of the settlement terms, Visa and Mastercard have agreed to roll back to the swipe fee rates that were in effect as of December 31, 2023 and maintain those rates for an additional five years. These measures provide merchants with a degree of stability and predictability in their payment processing expenses.

In addition to these court cases, legislative efforts (such as the Credit Card Competition Act) aimed at promoting competition and reducing interchange fees in the credit card industry are ongoing. These efforts have been supported by the National Retail Federation, who argue that the recent settlements don’t go far enough to reduce fees for merchants.