PaymentsJournal
SUBSCRIBE
  • Analysts Coverage
  • Truth In Data
  • Podcasts
  • Videos
  • Industry Opinions
  • News
  • Resources
No Result
View All Result
PaymentsJournal
  • Analysts Coverage
  • Truth In Data
  • Podcasts
  • Videos
  • Industry Opinions
  • News
  • Resources
No Result
View All Result
PaymentsJournal
No Result
View All Result

Unsettling Settlements: Credit Card Companies Finally Settle With Merchants

Brian Riley by Brian Riley
June 28, 2018
in Analysts Coverage
0
Wells Fargo: Delta Credit Cards

Wells Fargo: Will Credit Cards be Back in Vogue Soon?

0
SHARES
0
VIEWS
Share on FacebookShare on TwitterShare on LinkedIn

Headlines from Bloomberg to the Wall Street Journal announced that longstanding litigation between merchants and the credit card industry is near conclusion with a whopping $6.5 billion on the table.  Defendants include Mastercard, Visa and top-tier issuers including Chase, Citi, and Bank of America

  • The parties on Tuesday informed the U.S. District Court for the Eastern District of New York that they settled, the people said.

  • They intend to draw up a draft of the deal by mid-July and to submit a final agreement to the court by mid-August, the people added.

  • The case has been a highly contentious one for merchants and has raised questions about the longevity of the credit card fee model.

  • At issue are the card swipe or interchange fees that card networks set and that merchants pay to banks when consumers use their cards to shop. Merchants allege that the networks and banks have colluded to inflate those fees.

$6.5 billion is surely a ton of money, but most of it was set aside in advance.

  • Around $5 billion of the original settlement amount remained in escrow, according to people familiar with the matter, and would be distributed as part of the new settlement if it is approved by the court.

Actions against the card industry are still open with two large retailers:

  • Several large merchants, including Home Depot and Amazon.com Inc., have filed separate lawsuits over the fees. Among the terms that the merchants are challenging are the card networks’ “honor all cards” requirement.

As for the $6.5 billion, it will get split by merchants.

If the distribution goes as it did in similar litigation in Australia, merchants will enjoy the benefit, but consumers will see little benefit.  What is next? Interchange and rewards?

Overview by Brian Riley, Director, Credit Advisory Service at Mercator Advisory Group

Tags: Bank of AmericaCitiCredit CardsMasterCardMerchantsVisa
0
SHARES
0
VIEWS
Share on FacebookShare on TwitterShare on LinkedIn

    Analyst Coverage, Payments Data, and News Delivered Daily

    Sign up for the PaymentsJournal Newsletter to get exclusive insight and data from Javelin Strategy & Research analysts and industry professionals.

    Must Reads

    Digital Wallet Use Delivers on Convenience and Security

    Digital Wallet Use Delivers on Convenience and Security

    May 30, 2023
    5 Ways to Protect Your Financial Institution from a Cyberattack

    5 Ways to Protect Your Financial Institution from a Cyberattack

    May 26, 2023
    traditional banks

    How Traditional Banks Can Modernize Without Risk

    May 25, 2023
    identity fraud

    Javelin’s Identity Fraud Study Highlights the Changing Nature of Fraud

    May 24, 2023
    SASE, security-as-a-service

    Security-as-a-Service Secures
    Distributed IT Models

    May 23, 2023
    mule. real-time

    Early Detection of Mule Activity Requires Real-Time Solutions

    May 22, 2023
    embedded finance, ecommerce

    How Retailers Can Enter the World of Embedded Finance Confidently 

    May 19, 2023
    cross-border

    Cross-Border Trade is a Cinch with the Right Payments Partner

    May 18, 2023

    Linkedin-in Twitter

    Advertise With Us | About Us | Terms of Use | Privacy Policy | Subscribe
    ©2023 PaymentsJournal.com

    • Analysts Coverage
    • Truth In Data
    • Podcasts
    • Videos
    Menu
    • Analysts Coverage
    • Truth In Data
    • Podcasts
    • Videos
    • Industry Opinions
    • Recent News
    • Resources
    Menu
    • Industry Opinions
    • Recent News
    • Resources
    • Analysts Coverage
    • Truth In Data
    • Podcasts
    • Industry Opinions
    • Faster Payments
    • News
    • Jobs
    • Events
    No Result
    View All Result

      Register to download this complimentary report from Brightwell: