Visa, Mastercard, Major Banks Facing New Litigation over 'Anticompetitive' Fees

Merchants may soon have a way to fight back against credit card transaction fees that have climbed over $100 billion annually.

A proposed class action lawsuit has been filed against Visa, Mastercard, and major U.S. banks, including Bank of America, Capital One, Chase, and Wells Fargo, alleging a long-standing conspiracy to artificially inflate credit card transaction fees for merchants. The suit, filed by The Pizza Standard LLC, contends that these fees, described as "deadweight tolls," amount to "hundreds of billions in monopoly rents" and are set by "anticompetitive rules" that disable market competition. Specifically, the lawsuit claims that Visa and Mastercard, in coordination with issuing banks, have set uniform interchange fees that merchants cannot negotiate or avoid. This alleged collusion prevents competition among banks and credit card networks, allowing them to annually increase fees without consequence, costing merchants over $100 billion each year. The litigation follows a previous $5 billion class action settlement, which provided relief only for transactions prior to January 2019, leaving merchants who accepted Visa and Mastercard after that date without compensation for ongoing alleged injuries.

This new litigation targets the ongoing practice of allegedly anticompetitive interchange fees, a problem previously addressed by a substantial settlement, but one that plaintiffs argue failed to compensate merchants for fees paid since early 2019. The lawsuit's focus on "anticompetitive rules" and "restraints" suggests a strategy to prove a continuing conspiracy that inhibits market forces, potentially leading to significant changes in how credit card networks operate and how fees are structured.

The case will scrutinize the interlocking agreements between card networks and issuing banks, questioning whether these structures truly foster competition or merely maintain artificially high costs for businesses. If successful, this litigation could force a re-evaluation of interchange fee setting and potentially introduce more competitive pricing mechanisms for merchants, impacting the profitability of major financial institutions and card networks.