Interchange Litigation & Law

In recent history, several events have shaped the Interchange landscape:

  1. In Re Visa Check / MasterCard Money Antitrust litigation, Wal-Mart filed case was settled in 2003 with the bankcard associations agreeing to revise their honor all cards rules so that merchants can separately decide whether to accept their brands of credit and debit cards, reduce the interchange fees charged on signature debit cards and pay damages over a 10 year period.
    • Transactions during the period of Oct ‘92 to Jul ’03
    • Payments to merchants began in March 31, 2006
  2. In October of 2004, the Supreme Court refused to hear an appeal on US vs. Visa & MasterCard – which in effect, freed card issuers to partner with payment networks outside of the card associations.
    • MBNA and CitiCorp then announced plans to issue American Express cards. Facing the real threat of losing issuing bank members and with it valuable share of the consumer card market, both MasterCard and Visa created incentives to maintain their member loyalty
    • In April 2005, each made a strong play to keep member banks from partnering with AmEx and Discover by upping Interchange fees and thus issuers revenue. Competitive forces are pushing card associations to raise rates domestically
  3. In re Payment Card Interchange Fees and Merchant Discount
    • Status of pending case: The Judicial Panel on Multidistrict Litigation ordered all related cases transferred to the Eastern District of New York for coordinated or consolidate pretrial proceedings. The case represents millions of card-accepting merchants in the US including four of the largest merchant associations, National Association of Chain Drug Stores, the National Association of Convenience Stores, the National Community Pharmacists, the Association of National Grocers and American Booksellers Association. Their claim is that Visa and MasterCard conspired to unlawfully fix the price of Interchange. Discover in the case is ongoing.
  4. In October 2010 Visa and MasterCard agreed in a Justice Department consent decree to allow merchants to offer discounts to steer consumer payment choices. This settles the civil antitrust lawsuit brought by the Department of Justice and several states.
  5. In December 2010 the Fed, under the controversial Durbin amendment of Dodd-Frank Wall Street Reform and Consumer Protection Act signed into law in July 2010, announced Debit Card Rates and Rules for comment that would cap debit Interchange fees. Read more on Interchange regulation developments on the Vantage Card Blog.