What Payment Card Interchange Fee Settlement means for you?

The Payment Card Interchange Fee Settlement claims that Visa and Mastercard violated antitrust laws by imposing excessive interchange fees on merchants. These fees were allegedly the result of collusion among the defendants.

The Court granted approval for the Settlement on December 13, 2019, allowing eligible merchants to claim a share of the settlement funds, which total in the billions.

Plaintiffs argue that Visa and Mastercard breached antitrust regulations by establishing interchange fees and enforcing restrictions that prevented merchants from steering customers toward alternative payment options.

What is Payment Card Interchange Fee Settlement?

Interchange fees are charges that merchants pay to banks for processing card transactions. These fees are typically a percentage of the transaction amount, plus a flat fee. Over the years, they have been a contentious issue, with many merchants arguing that these costs are excessively high, ultimately passed on to consumers in the form of higher prices.

The Payment Card Interchange Fee Settlement alleges that Visa and Mastercard violated antitrust laws (Image credit)

The Payment Card Interchange Fee Settlement marks a crucial turning point in how interchange fees are structured and enforced. This settlement, which involves major card networks like Visa and Mastercard, aims to reduce the overall interchange fees merchants pay.

In simple terms, Payment Card Interchange Fee Settlement means that businesses may face lower costs when accepting card payments, which could lead to potential savings that might be passed on to consumers through lower prices.

What should consumers expect?

1. Lower prices at checkout: If merchants can save on interchange fees, they may choose to lower prices on goods and services, benefiting consumers directly. This could make everyday purchases more affordable.
2. Increased acceptance of alternative payment methods: With reduced costs associated with card transactions, businesses might explore and adopt more flexible payment options, including mobile payments and digital wallets, enhancing convenience for customers.
3. Potential changes in loyalty programs: Some merchants may adjust their loyalty programs or card-related benefits in response to changes in their payment processing costs. This could mean more rewards or incentives for consumers who use specific payment methods.

What is the current status of the Payment Card Interchange Fee Settlement?

The District Court for the Eastern District of New York granted final approval for the Settlement. The Second Circuit Court of Appeals reviewed oral arguments and upheld all aspects of the District Court’s final approval order, with one exception. The window for filing appeals has closed.

Claim submissions are currently open. Claim forms for known Class Members were mailed out starting in December 2023 and will continue on a rolling basis. If you did not receive a claim form by mail, you can still submit a claim. The deadline for filing claims has been extended to February 4, 2025.

Who is eligible for the Payment Card Interchange Fee Settlement?

Any business or merchant that accepted Visa and Mastercard-branded cards in the United States between January 1, 2004, and January 25, 2019, is eligible.

How to apply for Payment Card Interchange Fee Settlement?

Claim forms became available online starting in December 2023. The final date for eligible merchants to submit a claim is February 4, 2025, at 11:59 PM PST (extended deadline).

1. Visit the Merchant Portal: Go to the official Merchant Portal for the Payment Card Interchange Fee Settlement. This is where you’ll find the necessary forms and information.
2. Register or login:
   1. If you are a new user, you will need to create an account by providing your Claim ID and Control Number.
   2. If you already have an account, simply log in using your username and password.
3. Submit a claim:
   1. Once logged in, look for the “Submit a Claim” button.
   2. Click it to access the claim submission form.
4. Fill out the form: Complete the required fields in the form with your business information and any other requested details.
5. Provide necessary documentation: Attach any required documents that support your claim.
6. Submit the claim: After ensuring all information is correct, submit your claim.

Remember, the deadline to file a claim is February 4, 2025.

If you need further assistance or have questions, refer to the help section on the website or contact the Claims Administrator directly.

How much money will you get from Payment Card Interchange Fee Settlement?

The payout from the settlement will be based on the actual or estimated interchange fees attributed to Visa and Mastercard transactions between January 2004 and January 2019.

This settlement operates on a fixed fund basis. We anticipate that total claims will exceed the settlement fund, meaning all submissions could be proportionally reduced. This implies that claimants will receive a fraction of their estimated interchange fee volume during the settlement period. Currently, there is no way to accurately project how much you could receive.

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For example, if the total settlement fund is $5 billion and valid claims amount to $125 billion, the payout will be proportionate for each $1.00 claimed. In this scenario, with $125 billion in claims against a $5 billion fund, each claimant would receive a gross payout of $0.04 for every $1.00 of valid claims made.

There’s a possibility of substantial returns, as some of the largest merchants—like Walmart, Amazon, Delta Airlines, American Airlines, and Google—have either received compensation from the defendants or opted out of the settlement class.

Featured image credit: jcomp/Freepik