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NEW YORK -- Visa and MasterCard will pay a combined $3 billion to Wal-Mart, Sears, and other retailers as part of a settlement of a seven-year lawsuit over debit card fees, all sides announced yesterday.
The settlement includes a lowering of total card fees by an additional $1 billion later this year and could have a dramatic impact on how consumers pay for groceries, give a boost to retailers, and hurt the banks that issue the cards.
Visa USA will pay $2 billion, while MasterCard International will cough up $1 billion in separate settlements. Each will pay $25 million in cash by year's end, and the rest in equal installments spread out over 10 years.
The suit argued that credit card companies rules requiring merchants to accept their signature-verified debit cards imposed higher costs that are eventually passed on to consumers and stifle competition from smaller rivals using systems with personal identification numbers (PIN).
As part of the settlement, after this year Visa and MasterCard will no longer be able to require retailers who accept their credit cards to accept their debit cards too. The "honor all cards" policy was at the center of the dispute.