NEW YORK -- Lower fees for offline signature debit card transactions are scheduled to come into effect in August as a result of the settlement reached here in the class-action suit brought by nearly 5 million U.S. retailers against MasterCard International, Purchase, N.Y., and Visa USA, San Francisco.
MasterCard and Visa are required by the settlement to lower their fees for the offline transactions by at least one-third by Aug. 1, according to Lloyd Constantine, a New York attorney who was lead counsel for the retailers.
He said the settlement will "lead to better products and lower prices for every store in the United States."
U.S. retailers stand to save $63 billion to $100 billion in transaction fees by the end of the decade thanks to the settlement, Constantine noted.
A spokesman for the plaintiffs' legal team told SN a preliminary draft of the settlement is scheduled to be submitted in mid-June to Judge John Gleeson, U.S. District Court, Brooklyn, N.Y. Members of the class-action suit will be notified in July, and a final version of the settlement will be presented to Gleeson in late September, the spokesman said. Gleeson may then hold hearings to give those who object to the agreement their day in court, he added.
Constantine said, "We are cautiously optimistic the judge will approve the settlement."
The spokesman said that because there is an agreement in principle, the requirement to lower fees by Aug. 1 will remain in effect even though there will not have been a final judgment by that date.
An antitrust attorney, who requested anonymity, told SN the lower fees are a key provision in the settlement. "This relief was really innovative in helping smaller retailers," he said.
George Green, vice president and general counsel, Food Marketing Institute, Washington, which was one of the original plaintiffs in the suit before it was granted class-action status, commented, "We believe the settlement will bring competition to the marketplace along with decreased fees to retailers. Our participation ensured that all FMI members would be included in the case and would benefit from the final judgment. We're pleased we've been successful in that effort.
"We really do think consumers will benefit as well. Retailers will be able to inform consumers and encourage them to use the less expensive and safer card."
The settlement also requires the payment card companies to eliminate by Jan. 1, 2004 their "Honor All Cards" rule, which mandated that retailers had to accept all transactions Visa and MasterCard offered if they were going to accept any, Constantine said.
The card companies also hailed the settlement. Daniel Tarman, vice president at Visa, said, "This agreement allows Visa to do all it can to preserve consumer choice at the checkout counter, while minimizing confusion."
Robert Selander, MasterCard's president and chief executive officer, said, "With the prospect of a lengthy court process behind us, we can get back to focusing on being the best business partner for our customers."
In a separate development, the U.S. Second District Court of Appeals here late last week heard the card companies' appeal of an antitrust suit brought against them by the U.S. Department of Justice. The companies are appealing an October 2001 decision by the U.S. District Court here that said they must abolish policies that prevent member banks from issuing other card brands.