Visa Inc, MasterCard Inc & several US acquiring banks have agreed to settle an interchange fee and merchant discount antitrust litigation. The suggested settlement, still pending a judge approval, is setting a new industry record – amounting to $7.25 billion!
The Credit Card Processing Blog has repeatedly posted regarding the lack of transparency currently existing in the credit card processing industry. Taking a look at our latest posts: Rolling Reserve – the fine print, A new way to shop for a merchant account and Credit Card Processing – The right to know are three good examples.
One of the plaintiffs’ allegations was that Visa, MC & the acquiring banks are collaborating to directly and indirectly disable merchants from mitigating credit card costs. In order to mitigate costs one first need to be familiar with all relevant facts and understand the data gathered. Lack of transparency as well as artificial complexity does not enable merchants to effectively negotiate fees.
On top of the suggested settlement amount, the associations will now allow merchants, for the first time, to add a surcharge when accepting cards. Though such will not apply in: California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma & Texas, were such practice violates existing state discrimination laws, it is a huge shift from Visa’s and MC’s rules – prohibiting retailers from charging an additional fee when processing a credit card transaction.
Hopefully this historic suggested settlement would direct the associations towards transparency and simplicity for the benefit of all.
Gidi Argov, Founder and CEO