US Judge approves $5.7 billion credit card settlement

A federal judge on Friday gave Visa and MasterCard the go-ahead on a $5.7 billion class-action settlement to resolve merchant complaints over the fees they are charged each time a customer swipes a credit or debit card.

The ruling comes after years of litigation and ushers in the largest private antitrust settlement in history. Yet it is not enough to quell the anger of retailers, who say the agreement does not prevent the credit card giants from imposing higher fees with impunity.

The two firms were accused of fixing the credit card fees charged to merchants each time a credit or debit card was used.

It is believed to be the largest settlement of an antitrust class action suit ever.

Some retailers objected, claiming the terms weren't satisfactory.

Merchants first sued Visa and MasterCard in 2005.

An initial settlement of $7.2 billion was agreed on, but the amount was lowered after around 8000 retailers, including Amazon and Target, opted out of the agreement.

Many of those retailers have subsequently filed their own lawsuits.

Retailers first sued Visa and Mastercard in 2005 over "swipe fees," also known as interchange fees. Card processors, such as Visa and MasterCard, set swipe-fee rates, but merchants pay banks the fee each time a customer uses plastic. Swipe fees are typically 2 to 5 percent of the purchase price.

Merchants have argued that they have limited power to negotiate the amount of the fees, which cost them and their customers about $30 billion a year, according to the National Retail Federation. They have also accused credit card companies of barring them from steering shoppers to cheaper forms of payment.

Financial firms contend that they are charging retailers for providing a service that helps their businesses. The government stepped into the fray two years ago, when the Federal Reserve placed caps on swipe fees for debit cards but not credit cards.