In a Memorandum and Order filed today, US District Court Judge John Gleeson has approved the interchange fee settlement involving a class of approximately 12 million merchants that alleged defendants Visa U.S.A. Inc. and MasterCard International Incorporated, as well as issuing and acquiring banks conspired to fix interchange fees in violation of Section 1 of the Sherman Act.
Specifically, although the settlement either obtains or locks in place an array of rules changes, at its heart is an important step forward: a rules change that will permit merchants to surcharge credit cards at both the brand level (i.e., Visa or MasterCard) and at the product level (i.e., different kinds of cards, such as consumer cards, commercial cards, premium cards, etc.), subject to acceptance cost and limits imposed by other networks’ cards. For the first time, merchants will be empowered to expose hidden bank fees to their customers, educate them about those fees, and use that information to influence their customers’ choices of payment methods. In short, the settlement gives merchants an opportunity at the point of sale to stimulate the sort of network price competition that can exert the downward pressure on interchange fees they seek.
Gleeson goes on to note: "The goal is to incentivize the networks to compete for the merchants’ credit card volume through lower fees of all kinds, including interchange fees, and to allow merchants to recoup their costs when their efforts to steer customers to lower-cost means of payment do not succeed."
In making his final ruling in the case, Gleeson overruled what he called "virulent objections" from what he described as "a small number of objectors" to the settlement.