The Pros And Cons Of Visa Interchange

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Filed in 2005, Visa Interchange primarily challenged the legality of three credit card practices: mandatory default interchange fees that merchants must pay for every transaction; the Honor all Cards/Issuers rules that require merchants that accept and Visa- or MasterCard-branded credit cards to accept all cards of that brand; and, anti-steering restraints that prohibit merchants from using price signals at the point of sale to steer customers to less costly forms of payment (e.g., discounting and surcharging). . Default interchange. . Pursuant to the networks’ respective default interchange rules, competing banks must agree to fix interchange fees and not compete on that basis. . These mandatory fees have generated $450 billion and counting over the class period. . More than any other single issue, Visa Interchange’s financial, legal, and emotional heart remains controlling an inflated default interchange fee. . Honor all Cards/Issuers. This is the most significant of the so-called anti-discrimination or anti-steering rules. . Any merchant that accepts any one bank’s credit/debit cards must accept all other bank cards issued on the network. . Competing banks agree to not compete, thereby restraining them from providing preferential treatment to merchants at the point of sale that would entice the merchants to accept one branded product over another (e.g., Chase vs. Capital One mileage cards). . Plaintiffs argue that discriminatory treatment, such as discounts
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