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Visa and Mastercard Move to Dismiss Antitrust Claims by Intuit and Square

 |  February 15, 2024

Visa and Mastercard, two of the world’s largest credit card companies, have moved to dismiss antitrust claims filed against them by Intuit and Square, citing a $5.6 billion class-action settlement finalized last year with merchants, as reported by Law360.

The legal battle centers around allegations that Visa and Mastercard engaged in anticompetitive behavior by fixing interchange rates paid by merchants to accept their cards. Intuit, the financial software company, initiated its antitrust lawsuit in 2021, followed by Block-owned Square in the subsequent year.

According to the credit card giants, merchants who chose not to opt out of the settlement released not only their own claims but also those of their “agents,” which Visa and Mastercard argue should include payment processors like Intuit and Square. In a memorandum filed on January 31st, Visa and Mastercard contended that both Intuit and Square were designated as “payment agents” in their contracts with merchants, thus their claims were released as part of the settlement.

Furthermore, Visa and Mastercard asserted that enforcing the terms of the settlement should result in the dismissal of claims brought by Intuit and Square. They argued that class counsel never aimed to represent payment facilitators or processors because they were not directly affected by the alleged anticompetitive practices. Instead, the claims of these entities were released as part of the settlement by the merchants they served.

Read more: FTC Probes Competition In Visa, Mastercard Debit Routing Practices

Additionally, Visa and Mastercard maintained that third-party processors like Intuit and Square should be considered indirect purchasers under federal law, thereby barring them from seeking damages. They warned that allowing the claims from Intuit and Square to proceed could jeopardize the inclusion of their client merchants in the class settlement.

In response, Intuit has sought a partial summary judgment ruling, asserting its antitrust standing as a payment facilitator. The company argued that it is the “most direct payor” of interchange fees to Visa and Mastercard and emphasized that it opted out of the settlement to preserve its individual claims against the companies, per Law360.

“Defendants do not dispute the facts showing that Intuit is the direct payor of interchange fees and ‘merchant of record’ on all [facilitator] transactions, and never assigned away its claims based on the direct payment of interchange fees,” Intuit stated in its filing.

The legal dispute underscores the complex web of relationships within the payment processing ecosystem and the significant financial stakes involved for all parties. As the case unfolds in the New York federal court, the outcome could have far-reaching implications for the future of competition within the credit card industry.

Source: Law 360