Mastercard, Visa pay $7bn to settle card fees lawsuit with retailers

The retailers had alleged that card issuers such as Visa and Mastercard and major US banks such as Citibank and Bank of America conspired to fix the fees that stores pay to accept credit cards.

As part of the total payout, $6bn will be paid to stores and in addition, the card companies have agreed to reduce the swipe fees for about eight months which is valued at more than $1bn.

The credit card companies will also pay an additional $525m (£337m) to stores such as Kroger chain and the Rite Aid pharmacy chain, which sued them individually over the card swipe fees.

The lawsuit began in 2005 when several retailers alleged that the card companies violated anti-trust law by fixing the swipe fees. The swipe fee in the US is accounted for about 2% of the purchase price and is thought to generate over $40bn (£25.67) every year for the US banks.

The settlement, when approved by US judges will become the biggest anti-trust payout in US history.

Following the settlement, retailers could charge US customers extra for using credit card for a transaction.

Stocks of both Mastercard and Visa climbed in the after-hours trading session after the settlement was announced. MasterCard rose 3.7% and Visa climbed up 2.8%.