Déjà vu All Over Again and Again and Again

September 27, 2018 at 9:08 am Leave a comment

I know I used this similar headline less than a week ago but that’s exactly the point. When it comes to interchange litigation, we seem to be locked in a never-ending conflict which has crucial implications for the future of your credit union, at least if you are counting on credit card interchange fees as a continuing source of income.

In this excellent article in yesterday’s WSJ, the paper is reporting that even as the parties hammer out yet another settlement of their anti-trust litigation, major retailers including Amazon are likely to continue to fight to do away with the “honor all cards” rules. According to the paper, “The lead lawyer for a group of merchants suing Visa and MasterCard to end the “honor all cards” rule said merchants aren’t trying to take away consumer choice. “What merchants want is the right to negotiate the terms of acceptance like they do with vendors in every other aspect of their business and partner with banks directly,” said Jeffrey Shinder, a managing partner at Constantine Cannon LLP.

I appreciate his honesty. After all, it’s a lot harder to explain to people why so-called “swipe fees” really aren’t swipe fees than it is to explain why what the merchants are really looking for is the ability to cut exclusive deals for credit cards that will benefit not only the merchants but some of the biggest banks in the country at the expense of credit unions and smaller community banks. After all, if the honor all cards rule was done away with tomorrow, your Wells Fargo’s could still negotiate with merchants for interchange fees on a fair playing field. But a credit union wouldn’t stand a chance. The result would be a world in which merchants only accept credit cards issued by banks A, B, and C and your members are effectively penalized for belonging to your credit union.

Fortunately, this is one of the few areas dealing with credit cards where the law seems to be on our side. As I explained in this blog, earlier this year the Supreme Court upheld AMEX’s credit card rules against the challenge that they violated anti-trust rules by forcing merchants to accept conditions that they are powerless to object. A solid majority of the court rejected the plaintiff’s definition of monopoly power in the credit card context.

Of course there is nothing to stop the major retailers from creating their own credit cards or payment methods which provide benefits to consumers. This day is coming but for now merchants shouldn’t be allowed to pick and choose what credit card issuers they will honor and which ones they will not. That’s a choice the consumer should be allowed to make when they decide to go with a Visa, MasterCard, American Express or Discover card.

A Depressing Fact for Middle Aged Men

Even as the economy continues to roar along, the evidence continues to mount that more and more people are being left behind. The latest analysis which has gotten a lot of attention reveals that “Median real earnings for men who worked full-time year-round fell 1.1% in 2017 to $52,146: On an inflation-adjusted basis, men had earned more than that in 1972 ($53,609). This translates into 45 years of real-earnings decline for men.”

This is further evidence that America’s ladder of economic success is in danger of becoming a treadmill for the vast majority of workers.

Fed Raises Interest Rates Again

Meanwhile, back at the ranch, the Federal Reserve’s Open Market Committee did what it was widely expected to do: it raised the Fed Funds target rate another quarter of a point to between 2 to 2-1/4 percent.

On that note, enjoy your day.

Entry filed under: Economy, Legal Watch. Tags: , , .

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Authored By:

Henry Meier, Esq., Senior Vice President, General Counsel, New York Credit Union Association.

The views Henry expresses are Henry’s alone and do not necessarily reflect the views of the Association. In addition, although Henry strives to give his readers useful and accurate information on a broad range of subjects, many of which involve legal disputes, his views are not a substitute for legal advise from retained counsel.

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