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Monday, July 16, 2012

Visa, MasterCard Settle Lawsuit With Retailers on Credit Card Fees

Visa, MasterCard and credit card-issuing major banks agreed to pay retailers $6.05 billion to settle a long-running lawsuit alleging the violation of antitrust laws in setting credit card interchange fees.

The out-of-court settlement, which was announced late Friday, also includes a 10-basis-point reduction in credit card interchange rates for eight months -- estimated to equal about $1.2 billion -- that will be paid to retailers participating in the suit, and will be deducted from the interchange revenue of all banks.

The settlement also eliminates network prohibitions on the retail surcharging of customers for using credit and charge cards at the point of sale -- subject to a cap and retailer consumer disclosures. In essence, this permits the merchant to impose a “checkout” fee at the cash register for the use of the card.

In addition, the settlement includes provisions that extinguish the ability of all merchants to challenge network rules on point-of-sale issues, including interchange price-setting. It also contains merchant concessions that the agreement addresses all retailer competitiveness concerns over interchange rules.

The changes are likely to start taking effect in late 2012 or early 2013, although the full impact will likely occur later.

Read an ABA backgrounder on the issue.

3 comments:

Larry Werner said...
This comment has been removed by a blog administrator.
owengame said...

Thank you for the news. What's the update on this one? is it taking effect now? - Owen Game

Olya Olegovna said...
This comment has been removed by a blog administrator.

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