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BROOKLYN, N.Y. -- The proposed $7.25-billion deal to end a class-action lawsuit over credit card transaction fees will move forward despite 25 percent of retailers opting out of the swipe fee settlement.
According to Bloomberg News, Visa Inc. and MasterCard Inc. will continue to pursue the settlement even though opposition to the deal reached a level that would have allowed the card companies to walk away. Twenty-five percent was the threshold that permitted the credit card companies to back out of the deal, MasterCard President and CEO Ajay Banga told investors.
The proposed accord between the two sides in the 2005 class-action suit was reached in July 2011. The case is currently before U.S. District Court Judge John Gleeson presiding in the Eastern District of New York in Brooklyn. A fairness hearing for final approval of the proposal is slated for Sept. 12.
"The defendants as a group had the right to terminate the settlement agreement because the volume threshold of 25 percent was exceeded, but elected not to do so," Banga said during a July 31 conference call with investors.
Visa, MasterCard and some of the country's largest banks are seeking to end an eight-year-long legal battle over allegations that they fixed rates for the swipe fees -- which are sometimes called interchange fees -- paid by merchants that accept those credit cards.
Paul Cohen, a spokesman for Visa, declined to comment on the settlement, according to the news outlet.
As CSNews Online has previously reported, several major retailers -- including 7-Eleven Inc., Alon Brands Inc., Wal-Mart Stores Inc. and Starbucks Corp. -- opted out. Multiple trade associations -- such as NACS, the Association for Convenience & Fuel Retailing and the National Retail Federation -- also chose to opt out.
In a statement to Bloomberg News, the Electronic Payments Coalition said it remains confident the deal will win final approval. The group represents the interests of card payment firms and banks.
"While some big-box retailers are holding out for more money, there remains millions of smaller businesses that will benefit from this," said Sam Fabens, spokesman for the group.