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Table of Contents

Lead Story

Secrets of the Inc. honorees

News

Industry Update

Proposed interchange settlement: Judge approves, industry objects

Hurricane Sandy's huge impact

EMV on fast track

Harbortouch emphasizes training

Trade Association News

Features

Educational aid for the feet on the street

Selling Prepaid

Prepaid in brief

The gamification of rewards

FinCEN pushes for cross-border prepaid enforcement

Views

Consumer payments in a connected age

Patti Murphy
ProScribes Inc.

Smart ISO-MLS relationships

Jeff Brodsly
Chosen Payments

Education

Street SmartsSM:
Are you a 10?

Jeff Fortney
Clearent LLC

Differentiate yourself: Sell to the medical industry

Jeffrey Shavitz and Adam Moss
Charge Card Systems Inc.

Opportunities in RAN and private-label programs

Mustafa Shehabi
PayCube Inc.

How to propel merchants to shed comfortable habits

Rick Berry
ABC MobilePay Inc.

EMV: Game on!

Dale S. Laszig
Castles Technology Co. Ltd.

Have we missed the window for EMV?

Nicholas Cucci
Network Merchants Inc.

Company Profile

Keep in Touch Systems Inc.

Merchants Choice Payment Solutions

New Products

Helping merchants clinch the sale

Payday Express Plus
Secure Payment Systems Inc.

Capital resource for ISOs, MLSs

Residual cash advance program
ISO Advance

Inspiration

Thinking of starting an ISO?

Departments

10 Years ago in The Green Sheet

Forum

2012 - 2013 events Calendar

Resource Guide

Datebook

A Bigger Thing

The Green Sheet Online Edition

November 26, 2012  •  Issue 12:11:02

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Proposed interchange settlement: Judge approves, industry objects

Despite objections from powerful forces in the payments industry, Judge John Gleeson of the U.S. Eastern District of New York gave preliminary approval on Nov. 7, 2012, to a proposed $7.2 billion settlement of antitrust claims against Visa Inc. and MasterCard Worldwide. The suit concerns the card companies' interchange rules and was brought on behalf of more than 7 million U.S. merchants.

First Data Corp., PayPal Inc. and the National ATM Council all submitted objections to the proposed settlement in the first week of November 2012. They argued that settlement terms would give MasterCard and Visa an unfair competitive advantage and wrongly prohibit future antitrust actions even if the facts were significantly different than the issues litigated in the retailers' suit.

Gleeson responded to these objections saying he "will appoint an expert counsel to advise the court of issues and rule changes that will arise from this settlement."

NAC objects to broad interpretation

NAC is a plaintiff in an antitrust claim filed by independent ATM distributors against Visa and MasterCard in the U.S. District Court for the District of Columbia. It told the court the rules retailers are challenging in the New York District Court are different than the rules ATM distributors are challenging in D.C. District Court.

"The use of the same terminology 'interchange' to describe both merchants' fees for using payment card services and ATM operators' revenues for providing cash dispensing services potentially engenders confusion," the NAC stated in a letter sent to the retailers' attorneys in October 2012. The letter asked them to expressly acknowledge that the settlement does not apply to ATM operators.

NAC told the court it is concerned the plaintiff class could be erroneously given an "overly broad interpretation" that would impose settlement terms on plaintiffs in the ATM antitrust action in the D.C. District Court. NAC stated it was given verbal confirmation from plaintiff attorneys that the proposed settlement is not intended to cover the ATM operators.

First Data objects to surcharge language

First Data stated in its filing that it was "thrust into this case by virtue of an overly broad class definition ... a settlement that does not afford it opt-out rights, and a release that could forever bar it from questioning hundreds upon hundreds of rules and regulations that affect more than half of its multibillion dollar a year industry."

The processor said the proposed settlement's elimination of all future antitrust claims against the card companies would deprive First Data of its right to due process "while granting nonmerchant payment acquirers and processors and competitive networks ... nothing in return." Including First Data in the settlement "violates fundamental notions of fairness and constitutional due process," the processor stated.

The company further stated, "It is easy to understand why a processor would care about more issues than whether it can pass interchange fees on to customers and why an acquirer seeks more than money to compensate for previous years' lost funds."

First Data also said it was not adequately represented in the litigation because plaintiff attorneys represent the interest of retailers, not processors. (At press time, it was reported that First Data had been subpoenaed to produce information pertaining to treatment of merchant-specific data.)

PayPal asks for protection

In a letter to the court submitted Nov. 2, 2012, PayPal said the preliminary agreement should be modified so that it does not release the card companies from claims unrelated to the retailers' antitrust settlement.

It also stated the proposed agreement "by identifying PayPal as a competitive credit card brand, threatens to put Visa and MasterCard in a position to unilaterally undo the promised rollback of the 'no-surcharge rule.' It may also stifle legitimate competition within the industry."

PayPal noted it is specifically named as a competitor to Visa and MasterCard, but it is unlike the other named competitors, American Express Co. and Discover Financial Services. The difference is PayPal routinely processes Visa and MasterCard transactions, PayPal said. Because of this, PayPal believes the card companies unfairly claim an ability to govern how PayPal applies surcharges - an advantage they do not hold over AmEx or Discover.

"Merchants forced to decide whether to accept PayPal or whether to surcharge Visa or MasterCard may choose to surcharge rather than accept a new system, and this would inhibit PayPal's ability to give merchants and consumers another meaningful option at the point of sale," PayPal said.

For additional news stories, please visit www.greensheet.com and click on "Read the Entire Story" in the center column below the latest news story excerpt. This will take you to the full text of that story, followed by all other news stories posted online.

Notice to readers: These are archived articles. Contact names or information may be out of date. We regret any inconvenience.

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