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Tuesday, May 28, 2024

Extended deadline offers merchants reprieve in $5.5B settlement

The United States District Court, Eastern District of New York extended the deadlines for claims in the In re Payment Card Interchange Fee and Merchant Discount Antitrust Litigation settlement to Aug. 30, 2024. This extension gives businesses an additional 90 days to take part in what has become the nation's largest antitrust class-action settlement, totaling $5.5 billion.

The extension, publicized in a May 28 press release, reflects the court's intention to include as many eligible businesses as possible, especially small businesses that might lack the resources to promptly navigate the claims process.

Claims can be submitted online at PaymentCardSettlement.com or by mail. The process is streamlined to take as little as five minutes, according to the announcement. Eligibility for the settlement is broad, encompassing any U.S. merchants that accepted Visa and/or Mastercard payments between Jan. 1, 2004, and January 25, 2019. This includes businesses that have since closed or changed ownership.

The settlement stems from a 19-year legal battle over allegations that Visa and Mastercard inflated interchange fees. Alexandra "Xan" Bernay, co-lead counsel for plaintiffs on the case, expressed her satisfaction with the extension, emphasizing its importance for merchants to claim their share of the settlement, which spans over two decades of payment card transactions.

Dissatisfaction with settlement remains

Despite the settlement's intent to provide significant financial relief to affected merchants, not all industry players see it as a comprehensive solution. Stephanie Martz, general counsel of the National Retail Federation, criticized the settlement terms in a letter to the overseeing judge, arguing that it falls short of addressing long-standing anticompetitive practices in the industry.

According to Martz, the temporary interchange fee reduction included in the settlement is insufficient, and the agreement fails to tackle other rising card brand fees which could undermine the temporary relief offered.

Moreover, the NRF maintains, the settlement allows for future fee increases and imposes a virtually limitless ban on future merchant litigation over interchange issues, without offering opt-out rights. This aspect of the settlement has been particularly contentious, with major trade groups in addition to the NRF feeling sidelined in the negotiation process; they reported only learning of the proposed terms when the settlement was publicly announced.

Echoing these concerns, @Richard Crone of @Crone Consulting LLC, pointed out that while the settlement might introduce a "seismic shift" by allowing payment steering and collective bargaining for lower interchange fees, it doesn't address the numerous other fees levied by card brands that directly impact merchants. This concern was brought home by a recent announcement from Mastercard about an upcoming increase in its acquirer brand volume fee.

Controversial Credit Card Competition Act

This ongoing dissatisfaction among merchants and trade groups has fueled support in some sectors for the Credit Card Competition Act, proposed by Senator Richard Durbin, which aims to introduce more competition into the card processing market.

The act would require large banks to offer merchants a choice between at least two payment networks, one of which cannot be owned by Visa or Mastercard. This legislation, supporters argue, could foster true competition over fees, thereby benefiting consumers and merchants alike.

However, according to industry observers, implementing such a change would present complex challenges that could be disruptive to everyday transaction processing.

As the deadline approaches, the extended deadline not only provides a greater opportunity for claims but also underscores the complexity and contentious nature of the payment processing industry's fee structures, which continue to provoke debate among stakeholders.

Settlement FAQ are at www.paymentcardsettlement.com/en/Home/Faq. Merchants can file a claim at www.PaymentCardSettlement.com. end of article

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