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Payment Card Settlement Update…


As Settlement Notices have begun to reach merchant mailboxes, we’ve experienced an increase in traffic to our blog post titled "Payment Card Anti-Trust Settlement: Beware of Scam Artists". Most originate from organic searches asking “…payment card settlement…is it real?”

Court Settlement

Yes; it is real and, if approved, it would be the largest antitrust settlement in history. Further; according to CNNMoney, when the proposed settlement was publicly announced on July 13, 2012, Visa stock rose by 2.5%. How could this be? The financial markets understand what so many merchants do not: by offering to settle for an estimated $7.25 billion dollars, Visa and MasterCard effectively closed the door on potential threats to interchange autonomy.  The complex subject of interchange makes even financial analysts sleepy. It is definitely not appropriate blog material for either merchants or consumers. The high-level snapshot is that through this settlement, the pricing strategies utilized by the Card Associations remain loosely regulated. Depending on which camp you're in, this is viewed as either a good thing or a bad thing for consumers and merchants alike. Those in favor of tighter regulations believe that end-users are better protected by regulatory oversight and those in favor of the status quo believe “if it ain’t broke, don’t fix it”.

In nearly all instances, Cashbox has one foot in each camp. We understand the complexities of interchange and use that expertise to benefit of our clients. Regulatory oversight can certainly bear fruit. All merchants who have transitioned from a “Tiered Rate” to a “CostPlus” pricing structure have already experienced huge savings that are directly attributable to the Durbin Amendment.  Cashbox saved many clients thousands of dollars annually through a dramatic reduction in the underlying interchange for regulated debit card transactions. As an example: a merchant who accepts a $200.00 payment over the phone or through their website saves over $2.75 on every regulated debit transaction. The Durbin Amendment significantly improves the bottom line for all merchants whose average ticket falls between $50.00 and $500.00.  On the flip side of the equation; we’re certain that no single solution imposed by regulators would benefit all stakeholders. What makes the interchange system work for everyone is free enterprise and aggressive competition.

green piggy

One of the most important and long-term benefits of this settlement is the bright spotlight it shines on interchange. The proposed settlement will net merchants temporary relief for past transaction volumes, but does nothing to address future expense. In order to permanently lower their processing cost, merchants must gain a basic appreciation of bankcard pricing structures. So called “Qualified” or “Non-Qualifiedrates are artificial constructs designed by merchant service providers to protect their profits. Cashbox recommends all merchants should convert from Tiered Rate to CostPlus (also known as interchange pass-through) if they haven’t done so already. Typically; conversion results in an immediate cost reduction of 20%-35% and, in some instances, significantly more. Regardless; if you support the proposed settlement, we suggest you preregister your claim. If more than 25% of the affected class elects to opt out of the proposed settlement, the defendants have the option to withdraw.


Claim Forms are not available yet. If the Court approves the settlement on or after the September 12, 2013 Fairness Hearing, the Court will then approve a Claim Form and set the claim deadline. If you received a Settlement Notice in the mail, a Claim Form will be mailed or emailed to you automatically. The Claim Form will also be posted on the Payment Card Settlement website at


Preregistration is optional and does not affect your rights under the settlement. Merchants with multiple locations and/or franchise locations as well as single location merchants are encouraged to Preregister. The information you provide will be used to assist the Class Administrator in the preparation of your Claim Form. Follow the instructions at the site listed above to preregister.

The information and opinions expressed here are those of the author. We welcome your comments, observations and suggestions. 


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