Big news for credit card users. VISA and Mastercard users are set to receive a settlement of approximately $199.5 million. This case is the result of a legal battle that has been ongoing for the past ten years. In this blog, we’ll explain in detail what this settlement is, why it happened, who will benefit, and what you need to do to claim it.
The End of a Ten-Year-Long Legal Battle
This dispute began in 2016 when several retailers sued VISA and Mastercard, claiming they incurred costs due to rejected card transactions, even though they were not responsible. The case gradually escalated into a large class-action lawsuit involving numerous businesses.
After a ten-year legal battle, a settlement of $199.5 million was finally reached. However, VISA and Mastercard denied any fault. Their sole purpose was to avoid further expenses and legal complications.
Division of the Settlement Amount
Under this settlement, both VISA and Mastercard agreed to pay different amounts:
- VISA: $119.7 million
- Mastercard: $79.8 million
- This brings the total settlement to approximately $199.5 million.
This amount is currently pending judge approval. Payments will begin only after approval.
Impact on Credit Card Users
This dispute primarily involved spending by retailers and businesses. Therefore, it will not have any direct impact on ordinary VISA and Mastercard users. Don’t expect any changes to your daily card usage.
What is a Class-Action Settlement?
A class-action settlement means that a large number of people are involved in legal action.
- This occurs when a few individuals allege that a company has harmed a larger group.
- All individuals included in the class of cases, known as “class members,” may be eligible to receive a settlement payment.
- After accepting the payment, the right to pursue further legal action is usually waived.
Companies often choose to settle because it allows them to avoid further litigation and expense.
Retailers’ Claims and Their Challenge
Retailers involved in the lawsuit claimed they incurred additional costs due to card transaction rejections.
They believed this was beyond their control.
These businesses took legal action because these ongoing costs were causing them losses.
VISA and Mastercard did not accept the settlement, but approved the settlement to avoid the lengthy process and potential expense of litigation.
Settlement Examples from Other Companies
Not only VISA and Mastercard, but other companies have also been part of class-action settlements:
- American Express and Discover: $32.2 million settlement.
- AT&T: $177 million payment to customers in data breach cases.
Thus, class-action settlements have become a common method of providing financial relief to consumers and businesses.
Payment Process and Timeline
No specific payment timeline has been released yet.
- The payment process will begin only after a judge’s approval.
- US consumers are typically required to complete a settlement claim form.
- The total amount will be divided among all eligible class members.
Thus, patience is required to receive payment.
Why do companies choose settlements?
Companies choose to settle for several reasons:
- Reducing legal costs
- Saving time and resources
- Avoiding potential negative media coverage
- Avoiding further, larger litigation
VISA and Mastercard cited similar reasons. They stated that even though they did not admit any wrongdoing, settling was the best business decision for them.
What to Do for Users
If you are a VISA or Mastercard user, note:
- This settlement does not directly impact your daily card use.
- You will receive a separate notice from the court or company regarding any claims process for receiving payment.
- Typically, companies inform eligible individuals through an online claim form or email notice.
So, check your email and card notifications periodically.
Other Important Considerations
Class-action settlements like these offer relief for both consumers and small businesses.
In the future, major card networks like VISA and Mastercard will be more vigilant about customer satisfaction and dispute resolution.
Class-actions in US law mean that even small cases can have financial consequences for large groups.
This makes it clear that the legal process can be lengthy and complex, but ultimately, the rightful class members benefit.
Conclusion
This settlement is significant news for VISA and Mastercard users, especially businesses and retailers who have incurred additional costs in previous years.
- Total settlement: $199.5 million
- VISA payment: $119.7 million
- Mastercard payment: $79.8 million
- Payments will begin after the judge’s approval.
Although there is no direct impact on ordinary users, this case demonstrates that class-action settlements are an important tool for legal and financial protection.
It proves that even large financial disputes can be resolved through compromise and equitable resolution.
FAQs
1. What is this settlement about?
A. It’s a $199.5 million class-action settlement between Visa, Mastercard, and retailers over costs of rejected transactions.
2. Who is eligible for the payout?
A. Retailers and businesses affected by rejected card transactions, not regular card users.
3. How much will Visa and Mastercard pay?
A. Visa: $119.7 million | Mastercard: $79.8 million.