Interchange Settlement Battle Heats Up
May 31, 2013
Fallout over the proposed $7.2 billion interchange settlement between retailers and the card networks and their issuers continued last week and into this week as more retailers opted out of the settlement and additional lawsuits were filed on both sides of the dispute. The settlement proposal, which was struck last July after nearly a decade of litigation and negotiation, came under almost immediate fire from many retailers due to a provision that would prohibit further lawsuits on the matter.
Retailers that opted out of the proposed settlement before the May 28 deadline were free to file their own lawsuits over the same and related interchange issues as the original suit. A group that includes Target, Macy’s JC Penney, Kohl’s Bloomingdale’s, Staples, Victoria’s Secret, LensCrafters and Saks did just that. The suit charges Visa and MasterCard with collusion.
“As a consequence of having as members nearly all card issuers in the United States, and as a consequence of those card issuers having agreed to rules that preclude them from independently competing for merchant acceptance, Visa and MasterCard and their members have obtained and maintained market power in the market for merchant acceptance of credit cards and debit cards in the United States,” the complaint read. “This market power has led merchants to pay excessive interchange fees. In this manner, Visa and MasterCard have unlawfully restrained and continue to unlawfully restrain competition in these markets.”
MasterCard and Visa, in turn, have sued all of the retailers and trade groups that have opted out of the settlement. In the meantime, deliberation on the settlement continues with a hearing on the matter scheduled for September 12.