We were just wrapping up this issue when word came of the proposed $6.24 billion monetary settlement of the big federal antitrust case that has, for more than a decade, pitted merchants against card networks and major banks. The deal, however, only settles the money question—how much merchants will get as a cash settlement. It doesn’t touch on the other aspect of the case—the network rules by which, merchants say, they are made to pay above-market rates to accept network-branded card transactions.
Barring another settlement, that latter question will no doubt keep lawyers on both sides of the issue busy for years to come in what has been without question the most contentious issue the electronic-payments industry has had to grapple with.
But an interesting twist emerged in the immediate aftermath of the monetary settlement in the case, known as MDL 1720. As senior editor Jim Daly reported in a story in our email news service, Digital Transactions News, this latest agreement exposes, not for the first time, the diverging interests of the big merchants and those of the smaller ones. “[I]ndependent businesses, which in 2005 filed the original class action in the consolidated litigation now known as MDL 1720, are more likely to endorse the pending settlement than big ones,” Jim reported.
Indeed, while retail trade associations dismissed the settlement as a relative pittance against the sums the banks, Visa Inc., and Mastercard Inc. have reaped on card transactions, small sellers seemed pleased. Mitch Goldstone, president and chief executive of ScanMyPhotos.com, lauded this latest settlement as “extremely gratifying.” We know Mitch. We have spoken to him a number of times over the years. He’s no slouch in his criticism of network interchange rates. Indeed, ScanMyPhotos.com is the lead named plaintiff in the main MDL 1720 class action, which names Visa, Mastercard, and a dozen banks as defendants.
This case has had a tortured history, originating in 2005 with individual suits filed by merchants against the networks and the nation’s largest banks. An epic $7.25 billion settlement was finally reached in 2012, only to be tossed out in 2016 by a federal appeals court. In the meantime, opt-outs by large merchants had reduced the settlement amount to $5.7 billion. Now this latest deal is before Judge Margo K. Brodie of the U.S. District Court in Brooklyn, N.Y., awaiting her blessing.
In a bitterly contested case like this, her decision won’t please everyone. What’s more interesting is that her ruling is likely to meet with a mixed reception even among merchants, some of whom, at least, are apparently willing to call it a victory and take the cash.
—John Stewart, Editor, firstname.lastname@example.org