Merchants Must Respond to Credit Card “Swipe Fee” Settlement by May 28

By: Dr. Mark Lutschaunig, director, Governmental Relations Division

Since 2010, AVMA’s Governmental Relations Division has been involved in an ongoing battle on behalf of veterinary practices to reform credit card fees as part of the Merchants Payments Coalition. Now, as part of a class-action lawsuit against the credit card companies, eligible businesses are being asked to submit documentation by May 28 to help craft a proposed settlement agreement.

Most businesses, including veterinary practices, must pay credit and debit card companies fees so that their customers can use these forms of payment when purchasing goods and services.  These fees, called “interchange” or “swipe” fees, can typically run from two- to four-percent of the total purchase, amounting to thousands of dollars every year on merchants.

In July 2005, several merchants sued Visa, MasterCard and others alleging that they unlawfully fixed interchange fees and engaged in conduct that is in violation of Section 1 of the Sherman Act (In Re Payment Card Interchange Fee and Merchant Discount Antitrust Litigation). Over the years, the courts consolidated the lawsuits. Businesses, including veterinary practices, which accepted Visa and/or MasterCard any time between Jan. 1, 2004, and Nov. 27, 2012, are eligible to be members of the plaintiff class.

The courts announced a settlement in July 2012, which offers plaintiffs monetary damages equivalent to approximately three months’ worth of interchange fees  and, among other things, limited modifications to Visa’s and MasterCard’s surcharging rules. However, no fundamental market changes would constrain Visa and MasterCard over time from continuing to raise rates to a point at which merchants essentially have to pay for their own settlement.

The proposed settlement does not change two fundamental problems with the current swipe fee system. First, Visa and MasterCard can fix the rates for their banks so that the banks do not compete on prices. Second, Visa and MasterCard will continue to police merchants to ensure that the fees remain hidden from customers and that there are not competing market forces.

The proposed settlement also requires that class members release Visa and MasterCard from liability for any anticompetitive rules currently in place, including the interchange or swipe fee rules, and/or any “substantially similar rules” instituted in the future. While merchants must release credit card companies from liability forever, the small changes that Visa and MasterCard must make to their rules will end in 2021.

The settlement has been very controversial as many merchants are concerned that the final settlement does not go far enough to address the issues that led to the original lawsuit.

As part of the settlement, eligible members must decide whether to opt out, object to, or accept the settlement. Even if the eligible members submitted a declaration objecting to the proposed settlement last fall, they will need to respond again to the notice when it is issued and submit, in writing, if they choose to opt-out of or object to the proposed settlement.

Additional information about the settlement can be found online. Detailed information about merchants’ objections to the settlement and how to object and opt out of the proposed settlement via electronic signature can be found at  The deadline to object or be excluded is May 28.

One thought on “Merchants Must Respond to Credit Card “Swipe Fee” Settlement by May 28

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