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News
NAC case against Visa,
Mastercard going forward
T he National ATM Council Inc. and 13 indepen-
dent ATM operators will get their day in court
with Visa Inc., Mastercard and assorted card-
issuing banks. The U.S. Supreme Court's Nov.
17, 2016, reversal of the defendants' appeal will enable
the class action lawsuit to be tried in Washington, D.C.'s
Federal District Court.
NAC and ATM operators seek injunctive relief and
illumination of rules related to debit card network pricing.
Plaintiffs are challenging current pricing mechanisms
that Visa, Mastercard and affiliated issuing banks use for
setting ATM access fees, claiming the schemes are both
anticompetitive and a form of price fixing.
"The crux of the Plaintiff's complaints is that when someone believe in the system again."
uses a non-bank ATM, the cardholder pays a greater fee and
the ATM operator earns a lower return on each transaction
because of Visa and Mastercard rules," wrote Circuit Court
Judge Robert Wilkins in an August 2015 ruling that was
later appealed. "These rules prohibit differential pricing
based on the cost of the network that links the ATM to the
cardholder's bank."
Bruce Renard, Executive Director at NAC, is confident
the case will stand on its own merits, following five years
of delays. "NAC is genuinely pleased with the order of
summary dismissal issued yesterday by the United States
Supreme Court," he said. "The anti-competitive rules at
issue have protected Visa and Mastercard from competition
for network services at retail ATMs, with the result that
consumers have been paying inflated prices for using
ATMs, and fewer ATMs were deployed than otherwise
would have been the case."
A long fight
NAC and 13 additionally named plaintiffs filed the original
complaint in 2011 against what they deemed to be high-
priced ATM fees; two similar but isolated consumer class
actions were also filed during the same period against
major U.S. banks. The card brands and banks questioned
the cases' legal merits, leading the D.C. Federal District
Court to dismiss all three proceedings.
NAC successfully appealed the District Court's dismissal in
2013, winning reinstatement of the case at the U.S. Circuit
Court in 2015. The Circuit Court ruled unanimously in
NAC's favor, setting a trial date with D.C. District Court
Judge Richard Leon. Visa, Mastercard and affiliated banks
fought to dismiss the case, escalating the issue to the U.S.
Supreme Court.
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The Supreme Court reviewed the
defendants' formal brief on Nov. 16,
2016, and dismissed it the following day.
The precedent-setting decision from the
nation's highest court has set the stage for
all parties to legally debate the merits and
legality of debit network rules and pricing.
The Supreme Court reviewed the defendants' formal brief
on Nov. 16, 2016, and dismissed it the following day. The
precedent-setting decision from the nation's highest court
has set the stage for all parties to legally debate the merits
and legality of debit network rules and pricing.
"It's a small victory for the little guy, specifically the ATM
operators, and most importantly the consumers, against a
very big Goliath," stated George Sarantopoulos, founder
and CEO of Brooklyn, N.Y.-based Access One ATM and
incoming NAC Board Chair. "Victories like this make you
Fair trade, fair pricing
Outgoing NAC Board Chair Bonnie Dalrymple noted the
vital role independent ATM providers play in making
cash available, particularly in urban and rural areas that
exist outside national bank footprints. She and NAC board
members remain cautiously optimistic about the upcoming
trial. "Yesterday's Supreme Court's ruling is a real step
forward for the interests of U.S. retail ATM entrepreneurs
and the continued widespread access to cash for consumers
throughout our nation," she said.
NAC and its supporters are hopeful the lawsuit will resolve
irregularities in ATM pricing for transactions processed
on lower-cost debit card networks. Charging the same fees
for transactions that ride traditional card brand rails as
those processed outside of Visa and Mastercard networks
amounts to price fixing, some ATM deployers have claimed.
Opponents of uniform pricing across all ATM networks
allege the practice unfairly restricts trade and violates the
Sherman Anti-Trust Act of 1890, legislation intended to
outlaw monopolistic business practices. The card brand
networks are preventing independent ATM operators from
earning more for debit card transactions routed on lower-
cost networks that are not connected to Visa and Mastercard
networks, the plaintiffs stated.
"That mandate is the essence of the litigation and the basis
for our argument," Renard said. "NAC opposes charging
disproportional access fees to end users." NAC, a not-for-
profit national trade association, represents the business
interests of ATM owners, operators and suppliers.