For monopolizing the credit card industry
In 1996, a compilation of merchants gathered a class action lawsuit
against Mastercard and Visa Associations. These merchants contended that
Mastercard and Visa were using the offline debit transactions for higher rates
than the online transactions. They also state that the card companies were
forcing them to accept the debit transactions at a higher rate than the credit
transactions.
The merchants fear that Mastercard and Visa have pulled together to dominate
the Point of Sale (POS) debit card market. Making it dangerous and hindering
competition with other card services.
Mastercard
Mastercard believes that the case is frolicsome at best and informs the public
that the goal of the merchants is to undermine the ‘Honor all cards’ rule as
well as the anti- trust laws that exist to enhance the consumer’s ability to
choose how they want to pay. Mastercard believes that if this lawsuit is bound
and ties up their hands, it will destroy the client’s ability to have low fees
and the choices they crave for payments.
Visa
Visa is surprisingly mum on their opinion of the lawsuit. Although, they
are quoted as being terribly upset over a new suit from the UK merchants and
have every intention of fighting the suit to the full extent of the law. Their
website has no details on the final monetary amount for the class action
lawsuit and nothing in their blog that comes to light.
Whether that means they are brushing it under the carpet or not, one
wonders why they aren’t detailing their opinions and letting their consumers
and merchants know what is going on.
Walmart’s position on the lawsuit
In July of 2012, Wal-Mart rejected the payout by Visa and Mastercard.
Wal-Mart said adding, “That it urges all merchants to put consumers first and
reject the settlement.”
With a giant like Wal-Mart backing consumer interests, one wonders how
broken the system truly is? And with this ongoing, how far will they continue to
fix the system?
The courts decision
In a settlement of outstanding amounts, Visa and Mastercard agreed to a
$7 Billion payout to merchants that will stop a seven year court case and conflict
with merchants. It also includes a $6.05 Billion payment to over seven million
merchants for past damages and gives a brief reduction in the interchange fees
that have been valued at $1.2 Billion.
The second half of the suit contends that $1.2 Billion will be paid out
for the interchange fund at one tenth of 1% of the merchants during the eight
month period beginning in July of 2013.
2013 and the current issues
Even with a decade old lawsuit at its final hours, Wal-Mart is still
after Visa and Mastercard. It has indicated that it will seek another lawsuit
over the same conduct. Visa is at its wit’s end and has filed against Wal-Mart
asking the courts to relieve them of the frivolous and unending lawsuits by the
retail giant.
Visa is quoted as saying, “Wal-Mart has opted out of the settlement and
has publicly opposed and denigrated the swap settlement at every opportunity,
apparently preferring to remain litigating with Visa, seemingly forever. Upon
information and belief, Wal-Mart intends to bring a third lawsuit for the
alleged antitrust violations against Visa, continuing seventeen years of
seriatim litigation over the same issues.”
Author Bio:
Blair Thomas is an electronic payment expert, who loves all things finance
and planning. He is also the co-founder of eMerchantBroker.com, the #1 high risk credit card
processing company in
the country. But when he’s not running his business he’s exploring his other
passions; mountain biking and camping. If you would like to see what he's
up to, “like” on Facebook.
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