Visa and MasterCard on Friday announced a proposed $6.6 billion settlement to a long-running dispute over the fees they charge merchants, but one major trade group was clearly annoyed at the prospect.
The major card issuers were eager to put the seven-year-old lawsuit behind them, but whether the matter is truly resolved remains unclear. Visa, MasterCard and other U.S. financial institutions who were defendants in the case signed a memorandum of understanding to enter into a settlement agreement with the class of U.S. retailers who sued in 2005. That’s not the same as an actual settlement and the National Association of Convenience Stores said it rejected the proposal.
“NACS does not accept this proposed settlement and we reserve the right to fight it if other class representatives do accept it,” said NACS president and CEO Henry Armour. “There is plenty of time for merchants to make thoughtful decisions related to this proposed settlement. We hope and expect that, as they have the time to review it, many other merchants including class representatives will decide to reject this proposal.”
In addition to the cash payment merchants would receive, another proposal settlement involves U.S. merchant class members receiving a 10 basis points reduction in credit interchange rates for an eight month period and retailers could begin adding a surcharge to recover costs associated with acceptance of Visa and MasterCard products.
Despite NACS’s opposition to the proposed settlement, Visa and Mastercard were eager to move on and statements by both companies gave the impression issues related to how much they charge retailers to accept their cards had been resolved.
“We believe settling this case is in the best interests of all parties,” said Visa chairman and CEO Joseph W. Saunders. “We are comfortable with the terms, which we do not anticipate will impact our current guidance. Visa is well positioned to help drive the migration to electronic payments in the United States and globally.”
MasterCard general counsel and chief franchise integrity officer Noah Hanft said his company’s stakeholders were best served by an amicable resolution.
“Although we have strong defenses to all claims, a settlement avoids years of litigation and uncertainties that are inherent in such cases,” Hanft said. “We believe that today’s settlements should resolve all issues with the merchant community.”
Jason Oxman, CEO of the Electronic Transactions Association (ETA), a group representing more than 500 companies who offer electronic processing products and services, also sought to put the matter to rest.
“ETA and its member companies are pleased that all parties were able to reach agreement to end this litigation,” said Oxman. “The process worked, and all concerns about interchange raised by merchants have now been fully resolved, which provides much needed certainty. Our members look forward to working with the card networks, issuers and retailers to develop the innovative new products and services that will benefit consumers and merchants and grow our economy.”
That’s not how the matter was viewed NACS where the response was swift and sharply worded.
“This proposed settlement allows the card companies to continue to dictate the prices banks charge and the rules that constrain the market including for emerging payment methods, particularly mobile payments,” said NACS chairman Tom Robinson, president of Santa Clara, Calif.-based Robinson Oil Corp. “Consumers and merchants ultimately will pay more as a result of this agreement — without any relief in sight.”
As a class plaintiff in the litigation, NACS sought a trial to establish that the anticompetitive