EMA Files Objections to Proposed Swipe Fee Settlement

Yesterday, EMA filed its objections to a newly proposed settlement of a swipe fee case brought by a merchant class that accepted Visa or Mastercard credit cards between December 18, 2020 and the present. A federal court in New York rejected an earlier version of the settlement, and EMA views the new one now before the court as equally bad for merchants.

The thrust of EMA’s objections is that the latest version of the settlement provides only a temporary and unworkable solution to the problems caused by excessive interchange fees, while permanently restricting merchants' legal rights. The fee reduction of a tenth of a percent is negligible, and the 1.25% cap on interchange fees is only temporary and can easily be manipulated by the card companies that raise the network and other fees they collect. Visa and Mastercard would also retain centralized control over interchange fees and restrictive acceptance rules.

While the settlement would allow merchants to decline rewards cards, the card companies could add rewards to all their cards (even small and insignificant ones), which would make the right to decline rewards cards meaningless. And in return for these so-called "benefits," merchants would have to give up all their rights to sue Visa and Mastercard.

EMA also believes that even a bad settlement would be touted by Visa and Mastercard as a major achievement that they could use to kill the Credit Card Competition Act (CCCA) now pending in Congress. EMA has worked hard to support the CCCA as representing a real reform of the system and a significant step forward for its retailer-members.