"Our decision to settle is based on our belief that MasterCard and our stakeholders are best served by an amicable resolution," said Noah Hanft, MasterCard's General Counsel and Chief Franchise Integrity Officer in a statement issued in July 2012. "Although we have strong defenses to all claims, a settlement avoids years of litigation and uncertainties that are inherent in such cases. We believe that today's settlements should resolve all issues with the merchant community."In a statement issued by Visa in July 2012, Joseph W. Saunders, Chairman and Chief Executive Officer of Visa Inc said "We believe settling this case is in the best interests of all parties. We are comfortable with the terms, which we do not anticipate will impact our current guidance. Visa is well positioned to help drive the migration to electronic payments in the U.S. and globally."
Why are many merchant groups opposed to the settlement?
How might the settlement affect you?Merchants are likely to continue to build interchange fees into prices and customers who pay by cash or debit card will effectively pay those buried interchange fees. "The one who is paying unfairly high is the person who uses cash or debit, because they are helping to subsidize a fee that it isn't being caused by their transaction," says John Ulzheimer, President of Consumer Education for SmartCredit.com. Under the settlement, merchants are now able to charge a fee for credit customers; Ulzheimer anticipates that in the future, retailers will experiment with a dual pricing system (one price for cash/debit and another for credit customers).
Many experts and merchants predict that after eight months of reduced interchange fees, rates will return to previous levels and possibly even increase. Merchants may pass increased costs on to customers through raising prices or charging a checkout fee. "If it's approved, consumers will continue to pay extra money for the swipe fees. Their pockets will be secretly drained and they won't know how it happened," Mierzwinski says.