Interchange Lawsuit Update

In the seven-year old Interchange lawsuit (Payment Card Interchange Fee and Merchant Discount Antitrust Litigation case), a proposed settlement was announced on July 13, 2102, with an October 19, 2012 deadline to formally request approval from the court. If a preliminary approval is given at that time - a notice of the settlement will be sent to about 7 million U.S. merchants who accepted Visa or MasterCard credit cards since 2004. Then the judge overseeing the case must give a final approve before it can be implemented, which is not expected until the second half of 2013.

In the meantime, opposition to the settlement has grown claiming the settlement doesn’t do enough for merchants. Some trade groups have announced plans to fight the settlement in court. Both Target and Wal-Mart released statements criticizing the proposed deal. And recently US Senator Durbin, who led the amendment to the 2010 Dodd-Frank Act to have debit card Interchange regulated by the Federal Reserve, warned that the settlement would damage future legislative reform efforts.

Industry analysts are not surprised by Durbin’s comments or that some retailers object to the settlement yet don’t believe it will mean that the settlement won’t get approved. Many believe that the arguments against the settlement have already been considered in the long negotiations that lead to the proposed deal. Visa told investors that they expected the federal judge to grant preliminary approval to the settlement in the fall.

by Ty Hardison

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