Senior U.S. District Judge Brian Cogan granted preliminary approval of the settlement reached between the equitable relief class plaintiffs (“Plaintiffs”) and defendants Visa and Mastercard. JJLM is one of 4 firms that has been leading this case. The settlement, which will await final approval, provides the following relief to the more than 12 million merchant-class members:

• Honor All Cards Relief. The settlement effectively repeals the Honor All Cards rule by enabling merchant to accept stand cards while rejecting higher-cost premium cards and/or enabling merchants to accept consumer cards while rejecting higher-cost commercial cards.

• All Outlets Relief. Merchants can selectively decline acceptance of certain categories of cards at all outlets that operate under the same trade name or banner in the United States, even if that merchant accepts those cards at outlets operating under a different trade name or banner. Merchants can run pilot programs for up to 180 days in up to 20% of a merchant’s outlets each year with additional testing for merchants operating in at least five states.

• No Discounting Relief. Discounting by issuer, brand, and product is permitted.

• No Surcharging Relief. Merchants will be allowed to surcharge at the brand or product level up to the lesser of the full cost of acceptance or 3% of transaction, regardless of whether the merchants were to accept or surcharge comparator cards (e.g., American Express).

• Merchant Buying Groups. There are no restrictions on merchants’ rights to organize merchant buying groups to collectively negotiate rates (including interchange rates) for the Networks’ services and to buy those services as a group.

• Rate Caps and Rollbacks. The settlement provides systemwide limits on credit card interchange rates for five years in the form of (1) posted interchange rate caps and (2) a reduction of ten basis points to the combined average effective interchange rate. Additionally,  large merchants that pay negotiated interchange rates would get a pro rata reduction in those rates. The settlement also caps posted interchange rates on standard consumer credit cards at 125 basis points for at least eight years, marking a 62-basis-point reduction from the current average posted rate on standard cards.

• Merchant Education Program. The settlement provides for a $21 million fund for the establishment of a merchant education program to advise merchants how to use the provisioned relief to their benefit.

Click on the PDF icon to the left to view the Memorandum Decision and Order.