Judge Gives Retailers Approval to Move EMV Case Forward

Meanwhile, NACS President and CEO Henry Amour’s op-ed shows how important debit swipe fee reform has been to merchants and consumers alike.

October 10, 2016

SAN FRANCISCO – A district court judge has ruled that the retailers who have filed an antitrust and conspiracy lawsuit against credit card networks over EMV may proceed with their case, Mobile Payments Today reports. Two Florida merchants filed the lawsuit in March.

District Court Judge William H. Alsup overruled the motion by American Express, Discover, MasterCard and Visa to dismiss B & R Supermarket, Inc., et al v. Visa Inc., et al. The lawsuit claims that large banks and card networks colluded to put the liability of card fraud onto retailers, but they still charge fraud protection via interchange fees to those merchants.

“The amended complaint sufficiently alleges a context that raises a plausible and reasonable suggestion of collusion,” wrote Alsup in his opinion. “Plaintiffs have sufficiently pled the basic evidentiary facts as to involvement in Visa, MasterCard, and American Express in the alleged conspiracy.”

Also last week, NACS President and CEO Henry Armour blasted Congress for entertaining the idea of repealing the debit card reforms enacted. “Congress struck a blow for free and competitive markets in 2010 when it told the debit card industry it must compete on its prices or face some reasonable limits on its price-fixing from the Federal Reserve,” he wrote in an opinion piece for Forbes.

However, that’s not the only benefit of the reform: “Congress also ended the practice by Visa and MasterCard paying to block their competitor networks from handling many transactions. These ‘exclusivity’ deals between the giant card brands and mega-banks resulted in a majority of debit transactions being processed without any competition. …

“Now, however, the banks and card companies are back and hoping that Congress doesn’t remember that the market was broken and based on price-fixing before reform. … Congress should be trying to bring more competition to the debit card market, not wiping out the progress we’ve already made,” Armour wrote.

Armour went on to say that the debit card reforms are working. “Lo and behold, free markets do work. They have brought savings, cost efficiency, increased volume, increased transparency and security innovation to the debit market. The one and only problem with debit reform is that banks and card networks don’t like having to compete with each other. …

“Anyone who is willing to look at the actual results of reform (as opposed to the bank talking points) with an open mind will see that it is better in every way than the price-fixed, anti-competitive system we had before reform. Congress needs to look at that evidence and preserve the progress we have made,” Armour concluded.

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