How the Mastercard/Visa settlement with retailers could remake the payments business
After a 19-year legal battle, the settlement allows merchants to steer consumers toward cheaper payment methods, potentially upending credit card rewards programs as issuers and retailers may wage an 'incentives war' to capture transaction volume.
In 2005, George W. Bush was President and the BlackBerry was the cool handheld. The iPhone would not debut until 2007. The financial crisis was still on the horizon, and the Dodd-Frank Act wouldn’t hit banking for another five years.
Also this: 2005 was the year that a group of merchants and associations sued Visa, Mastercard and six major banks and related payments affiliates in a federal antitrust case called “In Re Payment Card Interchange Fee and Merchant Discount Antitrust Litigation.” Stripped to its essence, the case hinges on merchants’ complaints that interchange fees have long been too high.
In late March — 19 years and many legal twists and turns later — the parties announced a settlement of the long-running dispute that awaits final approval by the U.S. District Court for the Eastern District of New York.
Views on the settlement vary, and the settlement terms will play out over years.
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