NEW YORK ? ?I should have taken it as a sign when the agreement to settle the Visa/MasterCard interchange class action suit ? was announced on Friday the 13th ? It was only later that I read through the part of the agreement releasing Visa and MasterCard from future legal claims by merchants?And this is why the agreement will fail.?
This, coming from former MasterCard executive David True, who is now the president of NYPAY and managing director at Broadly Curious Advisors.
True?s opinion appeared last week in American Banker with the headline: ?Here's Why the Visa/MasterCard Swipe Fee Agreement Will Fail.? He writes that any merchant who has accepted Visa or MasterCard since 2004 ?will be unable to sue regarding interchange, network rules, merchant fees and related issues, even if that merchant has elected not to receive funds from the agreement.? This also includes any merchant who had no involvement in the lawsuit.
?This is flabbergasting, which is why I didn?t grasp it on first reading. I couldn't imagine such broad terms. It also helps me understand the sanguine comments Visa and MasterCard representatives made when the deal was announced and leads to my conclusion that, as merchants understand what the agreement means, more and more will object,? True wrote.
Even the ability for a merchant to surcharge is questionable, notes True, because Visa and MasterCard would be allowed to set a cap, limiting the amount a merchant could surcharge.
True also notes that the proposed settlement ?changes nothing about how interchange is set or the complexity of interchange rates,? and cites a merchant comment from Forbes: ? ?with Visa/MasterCard, the discount fee changes from card to card and the retailer never knows exactly what he is paying until long after the transaction has been completed ? [which] makes it harder to estimate your cost of doing business."
?Transparency has a value; the current Visa/MasterCard system is opaque and the agreement does not address this,? wrote True.
Noting that NACS, Target, Walmart and NGA have all come out in opposition to the proposed antitrust settlement, True believes more will come.