A legal battle lasting more than five years has been won by merchants against credit card companies that forced them to accept all cards just as the issuer instructed. This included cards which purported to offer gifts and rewards for which the merchant had to pay the card company with higher fees per transaction. It began in the middle of the last decade when first Visa then MasterCard decided they wanted to be like American Express and hype the card experience with giveaways. Of course, nothing is free. Merchants complained through the Canadian Federation of Independent Business (CFIB) and ultimately a class action lawsuit began its sway through the courts. The outcome permits merchants to charge a customer extra for a premium card. Whether the result will prove to be more than a moral victory is yet to be seen.
DENY WRONGDOING
Visa and MasterCard both released statements saying they do not admit to any wrongdoing, but entered into a settlement agreement in the case earlier this week. Both companies agreed to pay $19.5 million each and allow Canadian merchants to add surcharge fees on credit card payments. The revised rules will include a surcharge cap. Visa said in a statement that the new rules will come into effect 1.5 years after provincial courts in British Columbia, Alberta, Saskatchewan, Ontario and Quebec approve the settlement. The CFIB praised the decision saying it’s important for merchants to have the power to add a surcharge when customers pay with premium credit cards. The CFIB added it does not expect smaller merchants to widely use this new power although they may get tougher about accepting premium cards.