Merchants Sue Banks Over Transaction Fee

Several of the nation’s largest banks, including Citigroup Inc.’s Citibank and Bank of America Corp., illegally fix the price of credit card transaction fees, a group of small businesses charged Thursday in a lawsuit.

The suit concerns the fees charged by banks to merchants each time a customer makes a purchase using a MasterCard or Visa card, and charges that there is no limit on the banks’ ability to set the exorbitant fees.

In a statement, a Visa spokesman said the company planned to “vigorously defend” its use of the so-called interchange fees, which it called “a practice that has been successful in the marketplace as well as upheld as legal and necessary in federal court.”

Filed in federal court in Connecticut on behalf of five businesses in California, Minnesota and Connecticut, the suit seeks to represent the nation’s retailers as a class. It asked the court to end what it called the banks’ anti-competitive behavior and award damages, which an attorney for the plaintiffs said could reach tens of billions of dollars.