Merchant View

Merchants, represented by 19 named plaintiffs in the consolidated lawsuit, came to see the problem of runaway interchange fees as being rooted in the way card associations and issuing banks did business.

The Merchants’ Perspective

At the time this suit was filed, all the major card associations were affiliated with banks.

MasterCard was a membership organization owned by over 25,000 financial institutions. Visa was owned by Bank of America. These banks owned stock in the card associations and appointed their boards of directors.

The card association directors decided on the interchange rates they would charge for the use of their card products and payment networks.

The issuing banks that owned the card associations collected the interchange from merchants while maintaining they were unable to negotiate the rates, which were set by the card associations.

All the member banks charged the exact same interchange for a given card product, and therefore there was no possibility of price competition between banks based on interchange fees.

From the merchants’ perspective, this amounted to illegal collusion and price-fixing.

The merchants also felt hemmed in by other rules that were part of the payment network specification that every merchant was required to abide by before they could accept payment cards on that network.

One of these was the honor all cards’ rule that prevented merchants from choosing which cards they would accept from consumers.

For instance, if a merchant wanted to accept one type of Visa card, they were required to accept any Visa card that any consumer might produce, including premium cards with high interchange fees.

Merchants also complained about a lack of transparency in the system. Consumers had no idea how much of their payment was going toward interchange.

Additionally, rules prevented merchants from offering incentives like discounts that would steer consumers toward lower cost payment products.

Merchants also weren’t allowed to charge consumers a fee for accepting payment cards.

Merchants were permitted to offer cash discounts, but according to card association rules, they had to post both cash and card payment prices for every item in the store to do this. The complexity of implementing that solution prevented most merchants from offering cash discounts.

From the merchants’ perspective, they really only had one practical choice.

They could agree to accept card payments and play by the rules they had no power to change, or they could refuse to accept payment cards. Refusing to accept payment cards was not a realistic choice for most merchants. They were stuck.

At the outset of the case, merchants claimed that because issuing banks controlled the card association boards of directors, the card associations and banks colluded to set interchange rates, interchange rules, and other network rules in a way that amounted to unlawful price-fixing.

These practices meant unreasonable restraints of trade and monopolization.

Soon after the consolidation of the cases into one anti-trust law suit in 2005, Visa and MasterCard announced that they were going to become publicly traded companies and would no longer be owned by the banks.

MasterCard completed their IPO in 2006, and Visa completed theirs in 2008. Visa and MasterCard bought back shares from the banks, reclassified them, and transferred new shares to the banks.

When this happened, the merchants claimed that these arrangements prior to the IPOs violated federal antitrust law and state fraudulent conveyance laws.

The merchants claimed that various practices and actions of Visa, MasterCard, and issuing banks amounted to violations of the Sherman Act, the Clayton Act, California’s Cartwright Act and the New York Uniform Fraudulent Conveyance Act.

Disclaimer: You can file yourself without using a claims recovery service like Brownstone by going to or calling 1-800-625-6440. Claim forms are being delivered and are available online beginning December 1, 2023. Class members need not sign up for a third-party service in order to participate in any monetary relief. No-cost assistance is available from the Class Administrator and Class Counsel during the claims-filing period. Additional information regarding the litigation, is available at