Wednesday , June 19, 2024

Merchants Get an Extension to File Monetary Claims in the Big Credit Card Settlement

Merchants have been granted a 90-day extension to file a monetary claim as part of the settlement of a nearly two-decades-old interchange lawsuit filed against Visa and Mastercard.

Merchants now have until Aug. 30 to file their claims, the court overseeing the settlement has ruled. A settlement between Visa and Mastercard, on the one hand, and the merchant community, on the other, was reached in March. As part of the settlement, Visa and Mastercard are setting aside $5.5 billion in monetary damages to be paid to merchants. The settlement was the largest in antitrust class-action settlement history in the United States, according to the National Retail Federation.

Attorneys representing the merchants argue the extension was necessary to allow merchants time to gather data for their claims. “Claims are trending on pace with expectations. However, this is an extraordinary settlement that goes back 20 years, and given the settlement’s size, class size, and the nearly 15-year period it covers, it deserves a longer claims period to ensure that as many eligible merchants as possible have the opportunity to claim their share,” says Alexandra “Xan” Bernay, co-Lead Counsel on the case and a partner at Robbins Geller Rudman & Dowd LLP, in an email message. “Many small businesses, in particular, have limited resources so the 90-day deadline extension now gives them more time to take action.”

Merchants can file a claim in myriad ways, including swiping a QR code, sending a letter received by mail, or sending a claim through the claims portal at https://www.paymentcardsettlement.com/.

The court’s decision to grant a filing extension is not a surprise, as it is not unusual from an administrative standpoint to grant plaintiffs extra time to file claims for monetary awards, says Doug Kantor, an MPC executive committee member and general counsel for the National Association of Convenience Stores.

The extension is also expected to provide small merchants enough time to file a claim, says Dylan Jeon, senior director, Government relations for the National Retail Federation “With this being one of the largest antitrust settlements, a large volume of claims is expected and merchants should have the time needed to file a claim,” Jeon says.

Despite the size of the monetary compensation, the more important aspect of the case is the injunctive relief that is expected to cap credit card interchange rates. Under the terms of the settlement, Visa and Mastercard agreed not to increase their posted credit card interchange rates, which were effective on Dec. 31, 2023, for at least five years. The networks also agreed to lower their rates by at least four basis points, effective for no fewer than three years.

“Compared to interchange relief, the monetary settlement is a drop in the bucket, especially when you consider how much Visa and Mastercard have overcharged over the years,” Jeon says. “While the settlement brings some relief to merchants, the fear is that when the five years is up, Visa and Mastercard will go back to business as usual. Our main goal is to bring competition to the market.”

Merchants pay $100 million annually in swipe fees to Visa and Mastercard, according to the MPC.

Merchants argue one way to bring more competitive network pricing is to pass the Credit Card Competition Act, which would require financial institutions with $100 billion or more in assets to enable at least one network other than Visa or Mastercard for credit card processing.

“Passing the CCCA would help achieve the goal of entering [price] competition into the market by providing merchants with the choice of an alternative network over which to route transactions, such as Discover, American Express, or the debit networks,” Jeon says. “Giving merchants more choice over how transactions are routed can create price competition among networks and spur network innovation.”

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