Common Challenges and Issues in the Interchange Fee Settlement Claims Process

Millions of businesses may be eligible for a share of a $5.5 billion antitrust settlement involving Mastercard and Visa as a critical deadline approaches to submit a claim. You have time until August 30, 2024. The settlement originates from a lawsuit in 2005 accusing Mastercard and Visa, along with their member banks, of charging excessively high fees for accepting their credit cards and breaching antitrust laws. However, before filing a claim, it’s crucial to understand the common challenges and issues in the interchange fee settlement claims process.

Businesses that accepted Mastercard and Visa credit cards in the U.S. between January 1, 2004, and January 25, 2019, may qualify for a portion of the settlement funds. This also includes owners of businesses that have since shut down or filed for bankruptcy.

An Overview of the Visa and Mastercard Settlement

A group of retailers sued Visa, Mastercard, and its affiliated banks in 2005, claiming that the costs for handling credit card payments were unnecessarily expensive and in violation of antitrust regulations.

Mastercard and Visa have offered a settlement that could run into billions of dollars aimed at compensating merchants who accept these credit cards from January 1, 2004, to January 25, 2019. This settlement, if approved, would end the ongoing legal battle and affect a vast number of U.S. merchants of varying sizes who utilize Mastercard and Visa services.

The proposed settlement significantly reduces the fees merchants pay to process payments made with Mastercard and Visa. Visa notes that over 90% of its clientele are small business operators. The terms of the settlement include a five-year reduction in the published interchange rates and more latitude for merchants to apply surcharges.

More specifically, the interchange rates would be lowered by 0.04% for a minimum of three years. There would also be a cap on any rate increases beyond the levels set on December 31, 2023, for five years. Furthermore, for the same period of time, the typical effective systemwide swiping charges for Mastercard and Visa will be at least 0.07% less than the current average.

Importantly, the settlement grants merchants greater autonomy to implement surcharges and adjust pricing based on the type of credit card used, such as imposing higher charges for transactions made with rewards cards as opposed to non-rewards cards.

Another key provision is that merchants will have more influence in negotiating swipe fees directly with Mastercard and Visa.

Common Challenges and Issues in the Interchange Fee Settlement Claims Process

There are numerous unforeseeable challenges that can come before, during, and after the settlement of the Mastercard and Visa. Here are some of them:

• Determining Eligibility Challenges:

For many businesses, establishing eligibility and assembling the necessary documents for the Mastercard and Visa settlement is daunting. The settlement encompasses all parties that processed these credit card transactions between January 1, 2004, and January 25, 2019.

To prove eligibility, merchants are required to produce detailed transaction records, which can be taxing for those with unorganized financial documentation.

• Complex Nature of the Claim Form:

The claim form is complex and requires specific information about transaction volumes and interchange fees. Merchants can either accept estimated totals from Mastercard and Visa or provide their own detailed transaction data.

This requirement becomes even more challenging for businesses with multiple Tax Identification Numbers (TINs) as it necessitates identifying these identifiers and managing claims for each.

• Deadline Pressures:

Merchants must submit their claims by strict deadlines. Missing these deadlines can result in forfeiting the right to claim, adding extra pressure and urgency.

• Calculating Claim Amounts:

Determining the payable amount to each claimant is intricate and depends on historical transaction data, which is difficult for merchants who do not have detailed past transaction records.

• Fraud Risks:

Fraud is a significant concern during the claims process, necessitating stringent verification steps that may complicate and slow down submissions for valid claimants. Merchants are advised to utilize official websites and avoid potentially deceptive third-party services.

• Utilizing Third-Party Claims Services:

While some merchants may opt for third-party services to file claims, which can expedite the process, these services often entail substantial fees, thereby reducing the merchant’s share of the settlement.

• Costs for Legal and Administrative Services:

A considerable portion of the settlement funds is allocated to legal and administrative expenses, reducing the amount distributed to merchants. Claimants must be aware of these deductions to gauge their prospective compensation accurately.

• Administrative Delays:

With millions of potential claimants, administrative delays are unavoidable, causing frustration among businesses awaiting their settlements.

Additionally, each merchant’s final payout is contingent on the total number of claimants and the available funds, introducing uncertainty into the expected compensation.

• Appeal-Related Delays:

The settlement has been subject to appeals, potentially postponing the disbursement of funds. This creates uncertainty for merchants anticipating their compensation and can impact their financial planning strategies.

Want a Stress-Free Process? Get in Touch With Host Merchant Services

If your U.S. business processed Visa or Mastercard credit or debit card transactions anytime between January 1, 2004, and January 25, 2019, you qualify to file a claim to recover your award. Our website makes it simple to prepare for filing and to evaluate our monetization offer for your claim.

Host Merchant Services has teamed up with Certificate Clearing since the claim filing period commenced in December 2023, with notifications dispatched to 18 million class members. We are committed to facilitating a precise and timely filing on your behalf and can even convert your pending claim into immediate cash. Submit a claim with a monetization calculator, and reach out to us for assistance.

Conclusion

The Visa/Mastercard settlement offers a potential financial remedy for many merchants, but navigating the claims process can be difficult. Merchants must pay close attention to eligibility criteria, adhere to deadlines, and be prepared for potential delays due to legal challenges. Understanding these facets is essential for maximizing the benefits of the settlement and ensuring a smooth claims process.

Merchants can consult the official settlement website or seek professional legal advice for more detailed information or assistance with the claims process. This proactive approach will help effectively manage the complexities of the claims process and secure the rightful compensation under the settlement terms.

Frequently Asked Questions