MINNEAPOLIS -- Visa, MasterCard and major banks have agreed to pay $7.3 billion to millions of merchants to end a dispute over card fees.
"This is an historic settlement," said Craig Wildfang, an anti-trust lawyer in Minneapolis with Robins, Kaplan, Miller, and Ciresi and the lead counsel for the plaintiffs. "I've been a part of some big cases, but this is the biggest."
Wildfang says in terms of payout this class-action settlement is likely the largest in U.S. history.
The dispute involved payments called interchange fees that merchants paid in credit card transactions. Retailers alleged that Visa, Mastercard, and big banks engaged in price-fixing on credit card transaction fees. Fees, that ultimately drive up costs for consumers.
"This has been an eye-opening experience for me," said Mike Schumann, co-owner of Traditions Classic Home Furnishings in St. Paul and St. Louis Park. "I think we got the best deal we could've gotten."
Schumann was one of the original plaintiffs to sign on to battle the banks, Visa and Mastercard.
"We were selling a $3,000 sofa and we used to pay $35 on a debit card transaction," he says. "Now, we'll have tools that will finally reign in the abilities of banks and Visa and Mastercard to continuously escalate the cost of credit card acceptance."
About 7 million merchants were represented in the settlement and ultimately, the settlement includes several rule changes, which will impact the consumers.
"The case challenged fundamentally the structure of the payment card industry," says Wildfang."Even people paying with cash paid more because of the fees. Now the merchants and consumers are going to have the option of figuring out a better way, a more fair way."
It's a big win for many, even bigger for one of the original small business owners who took a risk.
"This is an example of how you can take on the largest players, the biggest banks and actually win," says Schumann.
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