MasterCard & Visa to Merchants: Let’s Settle This the Old Fashioned Way!

Whether you are a payment instrument (think credit, debit, gift, stored value, prepaid cards and more) expert or a retail merchant, a corporate purchasing manager or, like the rest of us, a consumer, you cannot have escaped the news, announced this past Friday (Friday the 13th), that Visa and MasterCard have agreed to settle a lawsuit brought by some merchants in connection with the fees merchants pay to be permitted to "accept" credit cards. I certainly couldn’t escape it. In fact, Joe Rosenbaum (that’s me) is quoted in yesterday’s American Banker article "‘We Won’ vs. ‘You Lost’: Reactions to Credit Card Settlement" written by Maria Aspan and Victoria Finkle.

While the settlement must still be approved by the court and provides billions of dollars in payments to merchants, the most contentious piece of this settlement relates to the so-called "interchange fees" (sometimes referred to as a "discount rate" – no pun intended) that refers to the charge imposed on merchants by the credit card associations and owners for their right to accept their branded credit cards from consumers.

When a merchant accepts a credit card, that merchant must have a relationship with the "brand" on the card (e.g., American Express®, Discover®, JCB®, MasterCard®, Visa®, Diners Club®, etc.), either directly or through a member institution. Because the brand owners operate vast settlement and transaction processing networks that allow you to use your card to buy a suit in Hong Kong or King Kong at a toy store, they charge merchants an interchange fee for the privilege of riding their networks – card acceptance translates into more business, say the brand owners.

If the settlement is approved, it will see MasterCard and Visa modify their operating rules to permit merchants to charge the consumer more to pay with a card. Merchants will have the right to "surcharge" the use of a card, rather than if you use cash or another payment method.

Where will this lead – it’s complicated. Stay tuned. The National Association of Convenience Stores has announced it has already retained counsel to challenge approval of the proposed settlement. The association says the settlement doesn’t go far enough and, for example, doesn’t put a limit on how high the brand associations can raise the interchange fees charged to merchants. Whether approved or whether the law suit goes forward, or some other settlement is reached – it’s complicated.

So, if you need lawyers to help you navigate the charted and uncharted waters of the financial seas ahead, talk to us. It’s what we do. Contact me, Joseph I. ("Joe") Rosenbaum, or any of the lawyers at Rimon you routinely work with. Our FIG (Financial Industry Group) lawyers are experienced in virtually every aspect of the law or finance, financial institutions and payment systems – from privacy and GLB, to chargebacks and B2B. Call us, you’ll like us.

Useless But Compelling Facts – July 2012

The release of “Skyfall” this November will mark the 23rd Bond film and comes in the 50th Anniversary year of the release of the very first Bond film, “Dr. No“. Many potential trivia questions arise from the films and the origins of Ian Fleming’s iconic character, James Bond, but most are far too easy for our discerning Legal Bytes readers – from the cast of Bond actors, starting with Sean Connery in 1962; to the Aston Martin DB5, arguably one of the most famous cars in the world; to the cast of supporting women and would-be evil-doers who have served as a foil to Bond’s escapades to save the world from constant and imminent danger. By the way, if anyone has a DB9 they want to donate to me, please let me know where I can retrieve it. I have aspired for each new model since 1963!

So, let’s make this one interesting. It would be hard to imagine anyone not instantly recognizing the distinctive opening sequence of every Bond film starting with “Dr. No” in 1962. . . Sighting down the barrel of a gun, usually followed by shots and red blood dripping down the screen as the title credits roll. Anyone know who created it AND, if you correctly identify the individual, can you tell me (a) the only two films prior to “GoldenEye” for which this same person did NOT create the opening title credits AND (b) which two well-known films had title credits created by this professional during an amazing career, but which were “uncredited” in the films.

If you know the answers and are first to send them to me, you’ll win. Send your answers directly to me at

Useless But Compelling Facts – April 2012 Answer

In April, we asked to tell us about an event that occurs usually no more than once a century; always happens in pairs, eight years apart; and last occurred in 1761 and again in 1769. Having transpired in 2004, many Legal Bytes readers were fortunate to know about and actually catch a glimpse of the transit of Venus last month – when it appeared as a small black dot taking a few hours to transit across the fiery disc of the star we call the sun. For those of you who missed it, it will happen again, but not until 2117 and then (eight years later) in 2125.

To be fair, the person who had the correct answer first was none other than long time Legal Bytes reader, fan and friend, Shari Gottesman. But when I checked, a grouping of people responded correctly within 24 hours to a tough question; so while Shari was first, let me also tip my hat (in order) to: James Griffin, Simon Persoff, Kathryn Farrara, Meredith P. Hartley, Mary Lew, William J. McDonough, Randy Henrick, Denise McCarthy, Judy Ruble, Richard Fine, Scott A. Grubb, Peter Le Guay (all the way from Australia), Marianne T. Urso, Yvonne Williams and Neira Jones. Thank you for reading; for responding; for being avid fans and eager readers.