ATM groups speak out against proposed Visa/MasterCard settlement

Nov. 7, 2012

The ATM Industry Association and the National ATM Council recently filed separate documents with the U.S. District Court of Eastern New York outlining their concerns about the proposed class action settlement between U.S. merchants and MasterCard and Visa.

The proposed settlement presumably would end years of disputes between merchants and the two card brands over interchange fees and surcharges. Merchants would gain the right to impose surcharges on credit card purchases, and would share in damages assessed against the card companies, which would amount to approximately $7.3 billion in payments and temporary interchange reductions.

In return, the card brands would gain indemnity from any and all future claims related to the case. Forever.

'Not so fast'

In an amicus brief — a document submitted to the court by a party that has an interest, but not a direct involvement, in a case — ATMIA said that the language of the proposed settlement agreement is both so broad and so vague that it could later be inperpreted to include ATM deployers, even though they were not a party to the case.

ATMIA asserted that the settlement class definition applies to Visa and MasterCard debit cards, which constitute the majority of the debit card market and which also serve as ATM cards. As a result, the class could be construed by extension to include the deployers of ATMs.

But, said ATMIA, even if ATM deployers were drawn into the settlement class, they would not be eligible to receive damages, because an ATM deposit/withdrawal transaction is not a purchase. Therefore, an ATM deployer could involuntarily become a party to this class action settlement, and at the same time, be barred from receiving any benefit from it.

ATMIA requested either that the proposed settlement be denied preliminary approval from the Court or that its language be revised to make clear that ATM deployers and operators are not included within the scope of this settlement.

NAC has seconded the ATMIA concern that the settlement language could lead to the eventual determination that it also included ATMs. In an Oct 1. letter to the counsel of record in the proposed class settlement agreement, NAC attorney Jonathan Rubin of Rubin PLC explained that the issue came down to terminology:

[T]he use of the same terminology, "interchange," to describe both merchants' fees for using payment card services and ATM operators' revenues for providing cash dispensing services potentially engenders confusion. Accordingly, we would request that the parties to any proposed settlement in the Payment Card Interchange Fee litigation expressly acknowledge that the settlement does not relate to any claims by any operator or deployer of ATMs. 

The ATM industry's case

Moreover, NAC pointed out to the court, the organization and named plaintiffs already had filed a separate and distinct case alleging anti-competitive conduct by VISA and MasterCard in the ATM industry, and that their case was now pending before the U.S. District Court for the District of Columbia. 

"NAC is pleased that the proposed settlement by VISA and MasterCard represents an effort to address claimed anti-competitive conduct by these companies in the merchants' setting," NAC Executive Director Bruce Renard said. "Likewise, NAC remains committed to vigorously pursuing relief from the anti-competitive price-fixing conduct fostered by these same firms in the ATM sector."

NAC's antitrust class action lawsuit is being heard by Federal District Court Judge Amy Berman Jackson, in a consolidated case now residing before the Federal District Court in Washington D.C., That suit is being heard along with several related consumer class action cases filed against VISA and MasterCard for alleged anti-competitive abuse in the context of ATM network and transaction services.  

For more on this topic, visit the transaction processing research center.

photo: steakpinball

Topics: Associations / Conferences , Regulatory Issues , Transaction Processing

Companies: ATM Industry Association (ATMIA)

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