October Deadline Looms for Interchange Settlement Approval
Aug. 13, 2012
The $7.25 billion settlement between merchants and card networks in a class action suit in which retailers charged the networks and issuing banks had illegally fixed interchange fees must be formally approved by Oct. 19, according to court documents unsealed late last week.
Terms of the controversial proposal include $6.05 billion reportedly to be paid in cash to the eligible class of retailers. The defendants will distribute the remaining $1.2 billion as a temporary 10-basis-point reduction in interchange fees. An additional $525 million will be paid to retailers who sued the group individually, according to court documents. Non-financial terms of the deal include giving retailers the right to negotiate interchange rates collectively with the networks and the right to surcharge customers who pay with a credit card (except in the 10 states where it remains illegal by statute).
Approval of the settlement, however, has become increasingly unlikely with public opposition coming from Walmart, Target and trade groups representing the nation’s convenience stores and gas stations (NACS) and cooperative grocers (NCGA), among others.