US retailers have vowed to fight a US District Court ruling in favour of a $5.7 billion settlement with Visa and MasterCard over credit card swipe fees.
Using the European Commission endorsed Tourist Test interchange rate cap of 0.3% for credit card transactions, interchange payments on the approximately $2.25tn of annual credit payment volume in the US should be $6.75bn per annum – a reduction
of over $35bn on current charges of $45bn. We should note that although we would not expect these fees to be as low in the US as they are in Europe due to the higher usage of unsecure signature card transactions, we can still identify that a total settlement
of $7.25bn is completely insufficient in compensating merchants for years of overcharges.
Many of the largest US retailers have opted out of the pay-out, and it’s not difficult to see why; the benefits of successful litigation greatly exceed the current compensation offer, and make the convenience of a quick one-off fee a very
undesirable option. Accepting the offer also eliminates retailers’ ability to fight interchange increases in the future.
Click here to read my full blog on the ruling on Finextra
Competitive (base+commission)UK (would consider Netherlands, Belgium, France or Luxembourg)
© Finextra Research 2014