- UPDATE: Merchant Groups Ordered to Correct Misleading Interchange Settlement Websites 4/11/13
- UPDATE: Preliminary Approval Granted 11/9/12
- UPDATE: Definitive Settlement Agreement and Motion for Preliminary Approval Filed 10/19/12
On July 13, 2012, the U.S. District Court for the Eastern District of New York announced that a settlement had been reached in the long-term legal dispute between retailers, payment networks and nine major card issuers over interchange fees and rules.
- Merchant Interchange Settlement Timeline as of January 25, 2013
- What Retailers Asked for What They Received - Comparison Chart
- SLIDESHOW: Summary of Preliminary Settlement Components
- Full text of the memorandum of understanding to enter into settlement
- Through years of negotiations, the parties involved agreed on the following terms:
- 1) $6.05 billion payment to retailers.
- 2) Deferred payment over time—anticipated value of about $1.2 billion. Paid out over 8 months and commencing after all “opt out” merchants are known.
- 3) As part of the settlement, retailers negotiated the ability to charge their customers a checkout fee (merchant surcharge) at the register. Elimination of the merchant surcharge rule—applicable to all merchants where permitted by state law—permitted on credit and charge card. There is a cap on the checkout fee, limiting it to cost of acceptance. The settlement requires notice and disclosure to the consumer at point of entry, point of sale and on the receipt.
- 4) The court will also certify an “injunctive class” setting forth “go forward rules”—no merchant may opt out of this class. The intent is to prevent further challenges to point of sale rules going forward.
- 5) “Properly formed” merchant buying groups can meet with networks to enter into commercially reasonable deals in their discretion and business judgment.
“The long political conflict over interchange fees is finally over, settled by a well-established legal process, which brought together retailers and the card industry for a negotiated resolution. After years of mediation, dozens of meetings, and millions of pages of evidence, the parties involved have willingly agreed to settle their dispute.
“As part of the settlement, retailers negotiated the ability to charge their customers a checkout fee (merchant surcharge) at the register. Historically, banning surcharging has been an important safeguard, and it remains illegal in ten states. To the extent that retailers do assess checkout fees, we are pleased that the settlement includes important safeguards that will help to curb any abusive or excess checkout fees at the register.
“The deliberate and measured approach of the settlement process is in stark contrast to that of the Durbin amendment, which was passed in the dark of night with no review of its consequences and virtually no public debate. These government price controls shifted $8 billion from banks to the retailers, with no evidence that consumers are seeing lower prices as a result.
“All parties have endorsed this agreement. The legal process worked and should send a signal to Congress that it is wrong to pick winners and losers in a complex dispute between two industries.”
Trish Wexler, EPC Spokeswoman, Responds to Interchange Settlement
EPC Member Statements
- MasterCard Statement: Here
- Visa Statement: Here
- ABA Statement: Here
- CBA Statement: Here
- ETA Statement: Here
- ICBA Statement: Here