A Convenience Truth: Convenience Stores Foreshadow Continued Interchange Battles
Report Summary
A Convenience Truth: Convenience Stores Foreshadow Continued Interchange Battles
As a variety of plaintiffs and non-plaintiffs reject the proposed antitrust settlement on interchange pricing, what do individual merchants really think?
Boston, September 18, 2012 – A new report from Aite Group assesses the potential implications of the largest proposed antitrust lawsuit settlement in U.S. history. This report discusses the lawsuit, starting with the first plaintiff to reject the settlement—the National Association of Convenience Stores, or NACS—and merchant sentiment relative to that of the NACS. Based on a July and August 2012 Aite Group survey of 54 convenience store merchants, completed in partnership with Convenience Store Decisions, the report concludes that interchange peace is still not in reach.
On July 13, 2012, the defendants in the class-action suit against Visa, MasterCard, and their member banks proposed a settlement agreement that includes more than US$7 billion in financial compensation to U.S. merchants. The proposed agreement also presents revisions to payment card acceptance rules that would allow merchants to offset card acceptance costs by passing them on to consumers in the form of surcharges. A variety of trade associations and merchants, however, have publicly rejected the settlement agreement on the grounds that it fails to resolve the anticompetitive practices of card brands and card-issuing banks and that it limits the ability of merchants to pass card acceptance costs to consumers.
“Given the building negativity surrounding it, the settlement could quickly become an incendiary device rather than serve its intended purpose of ending the battle once and for all,” says Madeline K. Aufseeser, senior analyst and co-author of the report. “It’s clearly time to return to the bargaining table.”
“If the goal is to stop the interchange battle between merchants and MasterCard and Visa, that goal will not be accomplished with this settlement,” adds Rick Oglesby, senior analyst with Aite Group and co-author of this report. “MasterCard and Visa should think twice about agreeing to the settlement and paying out more than US$7 billion.”
This 23-page Impact Note contains 12 figures. Clients of Aite Group’s Retail Banking service can download the report.