Merchants File Written Complaints Against Visa and Mastercard Settlement Offer

Merchants challenging Visa and Mastercard regarding swipe fees on credit card transactions recently complained in writing about the settlement offer made in November. 

Filing the complaint in the 20-year lawsuit are the National Association of Convenience Stores and Circle K Stores.

Attorneys representing the National Retail Federation and a group of academics also filed complaints against the settlement offered by Visa and Mastercard, Digital Transactions reports. 

Merchants are unhappy with the settlement offer, which they say does not address a Visa and Mastercard payments ecosystem that does not enable true pricing competition. But not everyone sees it that way.

“What we’re getting here is a reduction in interchange rates across the board somewhere around 10 basis points and so not insignificant,” said Ken Musante, President of Napa Payments and Consulting. “That’s going to flow to the pockets of past-year merchants, so very large merchants. And to be honest, there’ll be a lot of mainstream merchants as well.”

Merchants also would like to be able to negotiate interchange rates with individual credit card issuers. They are unsatisfied with the “honor all cards” rule from Visa and Mastercard, which requires merchants to accept all Visa and Mastercard branded cards.

This includes rewards cards, which may have higher interchange rates, Digital Transactions reports. 

Walmart was among the merchants objecting to the settlement offer from Visa and Mastercard saying, “it offers no meaningful relief” for big merchants, according to Reuters. Walmart also complained that the settlement offer did not end the “honor all cards” rule. 

In an additional complaint, merchants pointed out that just five small businesses had negotiated for a class of about 20 million merchants, Reuters reports. 

The Electronic Payments Coalition (EPC), representing Visa, Mastercard, and banks, issued the following statement about the settlement offer.

“Both sides worked in good faith to reach this new, comprehensive agreement,” the EPC said in a press release. 

“It provides businesses of all sizes with meaningful and significant concessions that give more flexibility and choice in card acceptance, greater ability to pass along card processing costs, a more than 25 percent reduction on standard credit cards, and capped interchange rates across the board.” 

The Visa and Mastercard settlement offer will next face judicial review. 

Tony DeSanctis, Senior Director at Cornerstone Advisors, said he believes an additional settlement offer will be forthcoming from Visa and Mastercard.

“I’m a little bit skeptical that this version is going to be the final version and that they’re not going to have to go back to the drawing board,” he said.

“I think they’re just going to continue to put proposals out there to try to find a middle ground. I just don’t know if this is the one. And if you read the merchant side of the payments media, they’re not happy with it,” said DeSanctis.

Merchants are unsatisfied with the Visa and Mastercard settlement offer. They would like to change the reduction in interchange fees, end the “honor all cards” rule, and have the ability to negotiate interchange fees with individual card issuers. The next step is for a judge to review the settlement offer.