In a significant move to close another chapter in their long history of legal battles with merchants, Visa Inc. and Mastercard Inc. have agreed to pay a combined $199.5 million to settle a class-action lawsuit accusing the payment giants of anticompetitive conduct related to fraud chargeback rules. The settlement, filed in the U.S. District Court for the Eastern District of New York, still requires approval from U.S. District Judge Margo Brodie before it becomes final.
Background of the Lawsuit
The class action, first filed in 2016, centers on claims that Visa and Mastercard conspired to impose unfair rules governing “chargebacks”—the process by which transactions are reversed when customers dispute purchases. According to the plaintiffs, the card networks jointly modified their fraud liability policies during the rollout of chip-based EMV cards, effectively transferring the burden of fraudulent transactions onto merchants who had not yet upgraded their payment terminals to accept chip cards.
Before the EMV liability shift, card-issuing banks typically absorbed the cost of fraudulent transactions involving counterfeit, lost, or stolen cards. However, when Visa and Mastercard changed the rules simultaneously, merchants who lacked EMV-compliant equipment became financially responsible for these losses.
The lawsuit claimed this simultaneous policy change amounted to illegal collusion under U.S. antitrust law, as it allegedly limited merchants’ ability to negotiate or choose alternative card networks. Merchants further alleged that the policy changes came without any reduction in the interchange or processing fees they were already paying, intensifying their financial strain.
Settlement Terms
Under the proposed settlement, Visa will pay approximately $119.7 million, while Mastercard will contribute $79.8 million. The agreement follows years of complex litigation, extensive discovery, and expert economic analysis. Both companies maintain their stance that they did nothing wrong and deny all allegations of misconduct or anticompetitive behavior.
In a joint statement, Visa and Mastercard reiterated that the decision to settle was not an admission of liability but a pragmatic step toward resolving the matter and avoiding further legal uncertainty. “We believe this resolution serves the best interests of all parties and allows us to continue focusing on innovation and security in digital payments,” Mastercard said in a prepared statement.
The proposed deal comes after Discover Financial Services and American Express Co. separately agreed to pay a combined $32.2 million to resolve related claims earlier this year. Collectively, the four payment networks will pay over $231 million to end litigation over these disputed rules.
A Measured Victory for Merchants
Attorneys for the merchant plaintiffs have hailed the settlement as a major win, emphasizing that it provides tangible recovery for businesses that suffered losses following the EMV policy changes.
According to court filings, the $199.5 million figure represents roughly 13% of the plaintiffs’ estimated maximum damages and more than half of the most conservative damages valuation put forward by Visa and Mastercard’s experts. Plaintiffs’ lawyers described this as a “strong, fair, and reasonable outcome” given the complexity, risks, and duration of the litigation.
For many merchants, the lawsuit symbolized more than financial restitution—it was about holding powerful financial institutions accountable for what they viewed as unilateral rulemaking in a market with few alternatives.
Connection to Past Legal Battles
This settlement is separate from the high-profile $5 billion settlement Visa and Mastercard reached in 2019, which resolved claims that the companies had improperly fixed swipe fees and restricted merchants from steering customers toward cheaper payment methods. That landmark deal, also overseen by the Eastern District of New York, was one of the largest antitrust settlements in U.S. history.
Together, these cases underscore the continuing tension between merchants and card networks over fee structures, fraud policies, and control over payment standards. While card companies argue that uniform rules are essential for network stability and consumer trust, merchants often contend that these same rules impose unfair costs on small businesses and limit market competition.
Legal and Industry Implications
The case—B & R Supermarket Inc. et al. v. Visa Inc. et al. (No. 1:17-cv-02738-MKB-JAM)—is being closely watched by the payments industry, regulators, and consumer advocates. If approved, the settlement could influence how future disputes involving payment technology and liability allocation are handled.
Industry experts suggest that the resolution may prompt card networks to take a more collaborative approach when introducing technology-driven rule changes. As digital payments continue to evolve—with the rise of mobile wallets, contactless transactions, and biometric authentication—the balance of power between merchants and payment processors remains a hotly contested issue.
What Happens Next
The proposed settlement now awaits final approval from Judge Brodie. Merchants affected by the policy changes will receive formal notice outlining how they can claim compensation or object to the terms. If approved, payments could be distributed sometime in 2026.
For now, both Visa and Mastercard have avoided the unpredictability of a full trial, choosing instead to settle on terms that bring financial closure without admitting fault. The agreement also spares both companies from potentially higher damages and reputational risk had the case proceeded.
Conclusion
The $199.5 million settlement marks another significant legal resolution in the ongoing friction between payment networks and merchants. While it does not fundamentally alter the power dynamics of the payments industry, it reflects growing judicial and commercial pressure on dominant financial players to act transparently and fairly in setting transaction rules.
As Judge Brodie considers final approval, the outcome will likely shape future litigation strategies—and perhaps even regulatory oversight—in the evolving digital payments landscape.
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