Delta Settles With Card Brands Over Swipe Fees

Delta Airlines reportedly has struck a deal with Visa and MasterCard to settle its dispute over the setting of interchange fees, which issuers receive when accepting their cards for payment. Delta earlier had opted out of class-action litigation where a federal judge approved a $7 billion settlement involving millions of merchants.

The Delta settlement also covers Northwest Airlines, which Delta merged with in 2009. Also included were Delta Private Jets Inc. and MLT Inc. Details of the Delta settlement were not yet available, but the airline has asked the judge presiding over the dispute, U.S. District Judge John Gleeson, to dismiss its claims against the card brands.

American Express issues the Delta SkyMiles card, and it’s doubtful a brand/card change is in the settlement mix.

Merchants initially filed their class-action case against Visa and MasterCard in 2005, alleging they colluded with the issuing banks on their boards to set interchange rates that were unfair to merchants and restricting card-issuer competition. The parties settled their dispute in last year, though about 8,000 merchants opted out, saying the terms of the settlement weren’t fair.

The Visa/MasterCard swipe fee class action lawsuit was initially filed in 2005. While it originally focused on the alleged collusion between the credit card companies and the banks that founded them, the litigation eventually focused on the brands’ restrictions on the merchants who accepted their payment cards and their swipe fees.

In August last year, Delta and more than 100 other companies that opted out of the settlement filed their own class-action case with similar allegations as the initial dispute.

In December 2013, a federal judge approved what is believed to be the largest antitrust settlement in history, with the card brands agreeing to pay $7 billion to settle the claims, which would be split among nearly 12 million merchants.

Soon thereafter, hundreds of merchants, retail groups, acquiring banks and health care providers appealed, asking the 2nd U.S. Circuit Court of Appeals to overturn the settlement. They contend the agreement grants the card brands “sweeping prospective immunity” from future litigation.