Wed Nov 7, 5:39 PM ET

Visa agreed to pay some 2.25 billion dollars to American Express to settle a lawsuit alleging collusion to block rival bank-issued credit cards in the United States, the companies said Wednesday.

The settlement leaves MasterCard as a defendant in the case filed in US federal court in 2004.

The case centers around allegations that the two major credit-card issuers, Visa and MasterCard, illegally colluded to keep their member banks from issuing cards branded by American Express or other issuers.

“The size of this settlement, along with earlier court rulings, underscores the seriousness of the damage done by the illegal boycott,” said Kenneth Chenault, American Express chairman and chief executive.

“We plan to move forward with the litigation to hold MasterCard accountable for the illegal actions that blocked banks from working with us for many years and to seek full compensation for the value that would have been generated for our shareholders.”

The settlement is subject to the approval of Visa member banks, which will be dropped as defendants if the deal is finalized. The banks include JP Morgan Chase, Capital One, US Bancorp, Wells Fargo and Providian.

Visa Inc., the umbrella group for the global credit-card brand, said Visa USA members would fund the settlement.

“Visa is doing what is in the best interests of its membership and the new organization,” said Visa Inc. chairman and chief executive Joseph Saunders.

“Our retrospective responsibility plan and these settlement agreements reduce risk and uncertainty for our members and Visa. I believe this is a positive resolution for Visa and its financial institutions.”

Under the proposed agreement, Visa would pay 945 million dollars and additional payments over the next 16 quarters for the remainder of the settlement.

“With this dispute behind us, Visa will remain focused on being a global payments leader,” Saunders said.