HARRISON (dpa-AFX) - MasterCard Inc. (MA) on Friday said it has agreed to a Memorandum of Understanding or MOU to settle the current U.S. merchant class litigation.
The company noted that the MOU has been executed by all of the defendants - which include MasterCard, Visa and a number of banks - and the court-appointed class counsel for the merchants.
Separately, MasterCard has reached an agreement in principle to settle all claims brought by the individual merchant plaintiffs.
MasterCard said its share of the cash portion of the settlements will total $790 million on a pre-tax basis. As a result, the company will incur an additional $20 million pre-tax charge in its second quarter 2012 financial statements. MasterCard said it had previously recorded a $770 million charge in its fourth quarter 2011 financial statements.
The company added that the U.S. merchant class members will receive a 10 basis points reduction in credit interchange rates for eight months, which will be implemented by MasterCard withholding this amount from U.S. issuers.
The company noted that it will also be required to make modifications to its No Surcharge Rule to allow U.S. merchants the ability to impose checkout fees on credit cards, subject to certain conditions that are intended to protect cardholders.
Merchants have agreed to provide consumers with disclosures and limit the level and circumstances in which they may impose checkout fees on a cardholder which are designed to avoid unfair, unexpected or exorbitant fees.
There are also provisions in the settlement that prevent MasterCard cardholders from being unfairly targeted with checkout fees relative to cardholders of competing credit card networks such as American Express, Discover and PayPal, should those networks enforce rules that restrict surcharging. State laws that may limit or prohibit surcharging are not impacted by this agreement, the company said.
The company noted that all business and rule practice changes will occur after preliminary approval of the settlement, most likely in late 2012 or early 2013.
Copyright RTT News/dpa-AFX
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