Reactions from the American Bankers Association, the major card brands and industry coalitions to the settlement of a long-standing credit card anti-trust suit have been largely favorable and have contrasted the settlement with the Durbin amendment which capped debit card interchange for many large debit card issuers.
Under the terms of the settlement, Visa and MasterCard along with some of the biggest card issuers will pay retailers a total of roughly $8.25 billion. The settlement also allows for retailers to surcharge with certain restrictions consumers who choose to pay with a credit card.
Reactions from the banks and issuers drew a contrast between this settlement, which had been worked out in a lengthy legal process, and the Durbin amendment.
“The long political conflict over interchange fees is finally over, settled by a well-established legal process which brought together retailers and the card industry for a negotiated resolution,” said a spokesman for the Electronic Payments Coalition, an association of card brands and issuers, including credit unions that was formed to oppose changes to the card interchange system.
“The deliberate and measured approach of the settlement process is in stark contrast to that of the Durbin amendment, which was passed in the dark of night with no review of its consequences and virtually no public debate,” the EPC added.
“These government price controls shifted $8 billion from banks to the retailers, with no evidence that consumers are seeing lower prices as a result. All parties have endorsed this agreement. The legal process worked and should send a signal to Congress that it is wrong to pick winners and losers in a complex dispute between two industries,” the EPC said.
ABA CEO Frank Keating echoed the EPC.
“Let’s be clear – retailers, not consumers, benefit from today’s resolution,” Keating said. “This settlement even provides merchants with the ability to impose ‘checkout fees’ on customers just for using credit cards. This type of behavior is nothing new for retailers. Even after receiving an $8 billion annual windfall from the Durbin amendment, they refused to pass along promised savings to customers and sued the Fed for even more profits.
“These types of issues are best resolved by market participants. Recent history illustrates the negative consequences for consumers when policymakers choose winners and losers and distort the marketplace. An excellent example is the ill-conceived passage of the Durbin Amendment, which led to increased profits for big-box retailers and no savings for consumers.
“Only time will tell if this history will repeat itself, as retailers continue to show little regard for consumers. While the banking industry may not like all the results in this case, our industry is ready to put this matter behind us and continue playing a critical role in our nation’s economic growth and job creation.”