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21st September 2018
Mastercard agrees to settle monetary damages related to US merchant litigation
Mastercard has reached an agreement to settle monetary damages claims in the US merchant class-action litigation. The agreement formalises prior discussions and has been executed by all of the defendants – including Mastercard, Visa and a number of banks – and the court-appointed class counsel for the merchants.
The settlement is an amendment to the financial terms of the 2012 Class Settlement Agreement and will be filed with the court seeking approval.
Tim Murphy, general counsel, Mastercard, said: “We are taking a significant step toward closing a chapter in a long-standing case. We can put this behind us and focus on continuing to innovate with our merchant partners to deliver the experience and convenience that consumers expect.”
In addition to the original 2012 monetary terms, Mastercard’s share of the financial agreement is an additional $108m, which is based upon the allocation of financial responsibility that was set out in the judgment and settlement sharing agreements that were executed in February 2011. In total, the defendants have agreed upon an additional payment of $900m in the current agreement.
The company recorded a $210m charge in its second-quarter 2018 financial statements, which will cover the financial obligation under this agreement and for estimated liabilities related to filed and anticipated opt-out merchant cases.
The merchant class-action that seeks the revision of network rules is not covered by this settlement agreement. That action remains outstanding while the parties are engaged in settlement negotiations.
After court approval of the monetary agreement, Mastercard and its customer financial institutions will receive a release of all monetary claims alleged by the merchant class members concerning the company’s interchange and fee structure and merchant acceptance rules. This release covers all previous, as well as future claims, for a period of five years after resolution of all appeals.