Visa, MasterCard Near swipe-fee Resolution To Close A 13-Year Old Lawsuit

Oct 22, 2018

After 13 years of argument, Visa and MasterCard are nearing dawn on the issue of fees charged when retailers take card payments, as leaked by a source.

The two card providers and big box banks like Bank of America Corp., JPMorgan Chase & Co., and Citigroup Inc. would compensate merchants up to $6.5 billion as part of the terms of the resolution, the source said, asking to be kept anonymous because the settlement hasn’t been made official.

The swipe-fee lawsuit was presented to the court in support of 12 million retailers worldwide and was filed over a decade ago. In 2016, a federal appeals court turned down a $5.7 billion resolution of the allegations accusing credit card firms of “improperly fixed credit-card swipe fees also known as interchange” that merchants pay when consumers transact using credit or debit cards.

Mastercard reported earlier this month that it plans to that it will boost its assets by $210 million this quarter “thanks to progress in negotiations linked to the financial damages claims.” Soon after, Visa said it had deposited another $600 million to the funds in its litigation escrow account. Spokespeople for both firms were reluctant to comment beyond the statements.

It should be remembered that Visa’s litigation escrow account already had around $884 million as of March 31, as reported by the company in a quarterly regulatory filing. Their counterparts Mastercard said it had set aside $737 million for litigation as of the same date.

However, this current settlement doesn’t cover provisions that hitched the 2016 resolution effort; as well as phrasing that would stop merchants from filing lawsuits over interchange rates in future even if they won’t take monetary benefits from this resolution, said the source.

Stating her expectations on the settlement, Mitch Goldstone said the parties involved two respected mediators for over a year in arriving at this agreement, and that the results shouldn’t raise any controversies. Goldstone is the CEO of ScanMyPhotos.com, an active member in the swipe-fee litigation team.

Also, The Wall Street Journal reported that legal representatives for both sides requested the then judge to reach a compromise, as evidenced by a June 27 filing with the court. Previously, they had agreed on April 17 to resolve the claims by June 25.

In conclusion

Now, we wait for the official settlement after several court sittings and high risk merchant account owners representing the lawsuit can be glad they’ll emerge victoriously.

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Having a merchant account allows an account holder to take advantage of merchant cash advances. When a merchant is approved for an advance, the business agrees to receive a lump sum of cash in exchange for an agreed-upon percentage of future credit card sales.

Pricing varies depending on the merchant’s industry, past credit card processing history, the type of business seeking the account, average ticket sales, and average transaction volumes.

Yes, EMB works with merchants who are building their credit, as well as those who have poor credit. EMB also approves merchants that have no credit card processing history and businesses that have lost their merchant accounts due to high chargebacks.

Several factors influence a merchant’s risk level. Though only one factor likely will not get a merchant classified as high risk, a combination of these may: business size, location, and industry, credit score, credit card processing history, a industry’s reputation for excessive chargebacks, a prior history of high chargeback ratios, and whether a merchant exclusively sells online.

Virtual terminals are stationed on a merchant’s website, making it easy for customers to make a payment or purchase online. Merchants or a payment processor can easily set up virtual terminals, so online businesses can accept credit and debit card and e-check transactions.

A merchant account is a business account with an acquiring bank. Without this business account, which actually works more like a line of credit, a merchant cannot accept and process credit and debit card transactions. Businesses need a merchant account to accept major credit cards via a static point-of-sale terminal, mobile card reader, or through a virtual payment gateway.

After filling out EMB’s simple online application and submitting any necessary, requested documents, many merchants get approved within 24 and 48 hours.

EMB specializes in working with high-risk merchants. EMB works with many merchants, including but not limited to businesses in these industries: gambling and gaming, adult entertainment, nutraceuticals, vaping and e-cigarettes, electronics, tech support, travel, high-end furniture, weight loss programs, calling cards, e-books and software, and telecommunications.

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