Interchange fees. The bain of nearly every merchant’s existence.
It’s no secret Visa and Mastercard set interchange fees, which typically range between 1 and 3 percent of the purchase price. However, what’s not widely known is the two credit card companies conspired to allegedly suppress competition in this space. Even after both companies restructured and went public-Visa in 2008 and Mastercard in 2006-their member banks continued these practices. A group of litigators representing merchant groups sued Visa and Mastercard, alleging the credit card juggernauts “imposed and enforced rules that limited merchants from steering their customers to other payment methods”. The lawsuit claimed Visa and Mastercard did not allow for discounts and no-surcharge rules, among other restrictions, which ultimately “insulated them from competitive pressure to lower the interchange fees”.
Why the Visa Mastercard Class Action Lawsuit Matters for You
One to 3 percent adds up to a fortune in losses for merchants and in profits for both credit card companies. According to Forbes, Visa processes more than 60 percent of U.S. credit card transactions. Last year, Visa processed approximately $14 trillion across
100 million merchants worldwide; Mastercard $8.2 trillion. The period covered in the lawsuit starts on January 1, 2004, and ends on January 25, 2019. After thirteen years of litigation, both parties agreed to settle for $5.6 billion. The judge awarded $523 million in attorney’s fees to the litigators who represented the merchants. The settlement covered about 12 million businesses.
Why It’s Important to Claim What’s Owed
Circuit Judge Dennis Jacobs, of New York, acknowledged that the gas stations who objected to the deal are confused, Bloomberg Law reported. “The dispute is not over which group of class members will get the recovery; the dispute is over which claimants are within the class.” Last March, Jacobs denied an attempt to dismember the deal. He wrote in his decision, “The average award, if every class member claims every dollar, will be $325. But no one knows how much of the $5 billion settlement amount will be claimed and paid out. Whatever is left over, the trial judge will be authorized to donate for unspecified good causes, defined as the “next best compensation use, e.g., for the aggregate, indirect, prospective benefit of the class.” In other words, many merchants don’t know that class action lawsuit exists and what they are owed. As a result, even the judge who presided over the lawsuit thinks it’s unclear how much of it will be paid out. Here’s where Financial Fuel Services and our partner, MCAG, come in.
What To Do If Your Business Was Affected
Financial Fuel Services is working with customers who have been negatively impacted by Visa and Mastercard’s interchange fees between 2004 and 2019. If you are a merchant who accepted credit cards during those 15 years and would like to be included in the class action lawsuit, please click this link: Register Your Business
Please feel free to contact us for more information on 724-746-9860.
