In recent years, you’ve likely received several communications related to the Visa and Mastercard Payment Card Settlement. These may have been emails or calls from entities offering assistance in reclaiming funds lost to merchant processing costs. While initial developments may have been slow and complex, significant progress is now being made in this case.
Key Developments in the Settlement Process
As of December 1, 2023, claim forms started being dispatched to merchants, a process expected to extend into January 2024.
Eligibility and Participation
You might wonder, “What does this mean for me?” If you didn’t opt out of the Settlement by July 23, 2019, and accepted Visa and MasterCard payments between January 1, 2004, and January 25, 2019, you’re eligible to participate. Additionally, participation is optional, even after receiving your claimant number. Learn how you can begin the claimant process below:
Option 1: You choose to participate and file a claim
If you have received a claim form with a claimant ID and control number, you can log in at the official Payment Card Settlement website, here: Payment Card Settlement | Official Court-Authorized Website – Login. If you haven’t received a claim form, providing your Tax-Payer Identification Number (TIN), along with additional business information will allow a Class Administration to determine your eligibility. We recommend that you utilize the official website to avoid fraudulent links.
Upon receiving your claim form, you will find that it includes estimated totals from Visa and MasterCard, detailing transaction, volumes and interchange fees. These estimates offer a foundation for your claim, allowing you the option to proceed with these figures or provide your own data for a more customized assessment. Additionally, for those managing multiple TINs, the system facilitates an efficient linking of these identifiers within your established profile. This feature is designed to streamline the claim filing process for businesses with complex structures.
Ultimately, the settlement payment will be based on your actual or estimated interchange fees associated with Visa and MasterCard transactions from the timeframe of January 1, 2004, through January 25, 2019.
The deadline to file is May 31, 2024!
Can I utilize a third-party service to file the claim?
Yes, merchants have the option to enlist third-party services to file their claims, though they are free to file claims independently without incurring third-party costs. Additionally, merchants are entitled to contact the Claims Administrator, or Rule 23(b)(3) Class Counsel, at no cost, to request assistance with understanding and filing the claim form. Keep in mind, there is still much uncertainty about the timing for funding and the settlement amounts that will be paid out.
How will I know how much I will receive?
Visa, MasterCard, and the Bank Defendants have agreed to pay a minimum settlement of $5.54 billion to merchants who have not excluded themselves. In addition to exclusion status, your individual payout is dependent on a variety of factors such as the number of participating merchants and the actual or estimated interchange fees associated with your Visa and Mastercard transactions from January 1, 2004, through January 25, 2019.
Additionally, the settlement funds will be reduced by an amount not to exceed $700 million, for those merchants who have excluded themselves. These funds will also cover the cost of the settlement administration, tax expenses that are approved by the court, as well as any approved legal expenses.
When will I receive my claim funds?
The timeline for disbursing funds has not yet been determined. Payments are expected to begin after the May 31st, 2024, claim submission deadline, and subsequent court approvals.
Option 2: You choose not to participate
It is completely at the merchant’s discretion to not participate in the settlement. However, it should be noted that if you did not opt out of the settlement by July 23, 2019, you will be bound by the terms of the agreement which includes the release of certain claims against the Defendants and other parties identified in the Agreement.
These claims are released if they already have accrued or will accrue in the future, for up to five years following the court’s approval of the settlement and the resolution of all appeals. Essentially, we believe the courts took this approach to prevent numerous additional lawsuits within the window of five years that could be similar in nature. If you don’t file a claim by May 31, 2024, you will not be eligible for a portion of the settlement. For detailed information of the release and claims please see the court document here: Microsoft Word – Interchange Long Form Notice 4.11.19 – clean (paymentcardsettlement.com)
Settlement Background and Final Thoughts
This lawsuit, initiated in 2005, accused card brands and banks of colluding to fix merchant processing fees. This settlement involves both Visa and MasterCard as well as major US banks which issue their cards, including JPMorgan Chase, Bank of America and Citibank. The lawsuit culminates based on the interchange fees merchants paid during the time frame from January 1, 2004, to January 25, 2019.
During this time, it was stated that the associated card brands and banks violated the law by imposing and enforcing rules that limited you, the merchant, from steering your customers to other payment methods. These rules did not allow surcharging or cash discounting, and required all cards be honored, which ensured the card brands and banks controlled the market. The court did not state which side was right or wrong or which laws were violated. Instead, an agreed upon settlement by both sides has been reached, averting the possibility of further trials and appeals.
The settlement is an ongoing process, and the outcome for non-opt-out merchants is still being determined. It is unknown how many merchants will be participating to share in the funds, and it is at your discretion if you would like to participate.
While we don’t provide claim filing assistance or legal advice, we’re here to offer informational support should you need it. For inquiries or further clarification regarding the claim submission process, please reach out to Chelsey Kukuk, Director of Payments at Redbridge, at Ckukuk@redbridgedta.com. Otherwise, please consult your legal counsel for personalized guidance.