Tag Archives: MasterCard

What is EMV Chip Card Technology?

EMV® is a worldwide standard for credit and debit card payments based around the use of chip card technology. The acronym stands for Europay, MasterCard, and Visa, who collaborated to create the technology. The goal of this project was to create a card that worked based off of a microprocessor chip that is read by the payment terminal.

How it works

The transaction has a built in verification system that requires both the chip in the card and a PIN number the customer enters. This extra step verifies that the person with the card is in fact authorized to use it. This is just the first facet that makes these transactions more secure. Each chip contained in the card generates an original and unique code for each transaction. This unique identifier makes it easier to track transactions and identify fraud.

Comparison to Existing Magnetic Stripe

Everyone knows the magnetic stripes exist on almost every single card in the U.S. currently. These pass very simple data through the system at the time of the swipe, mainly just card number and expiry data. The data passed back and forth between the terminal and chip card is much more sophisticated and encrypted for added security. Another downside to the magnetic stripes is their shelf life. Many frustrated clerks can tell you that a card that is used often does not usually make it to its expiration date. Merchants should know that they need to swipe the card to get the lowest interchange rates for most cards. Often times, front line workers do not know that the business is paying a higher rate if the card is keyed as opposed to swiped.

Future Growth

EMV is already widely used worldwide. As of Q4 2012, there are roughly 1.62 billion EMV cards in consumers’ hands. Combine this with the 23.8 million terminals that have been deployed throughout Europe, Asia, and Africa and it’s easy to see that this technology is here to stay. HMS fully supports EMV processing and works with merchants to offer this to their customers. With Visa and MasterCard poised to really step on the gas concerning U.S. migration, merchants need to be up to speed on the new processes and technologies.

This upgrade in technology will have an impact on a wide range of hardware including:

ATMs
Existing POS machines
Vending machines
Automated fuel pumps
Ticketing kiosks
Etc.

While replacing the vast amounts of existing hardware might seem daunting on a macro level , the time and capital committed to this migration is absolutely worth it when you consider the upside. The combination of both new terminals and chip cards will reduce risk for both consumer and business. Also, by making chip cards more universal, American tourists who travel abroad will have a consistent experience and won’t need a “special card” for overseas trips. This point is even more powerful when you consider that there are roughly 56 million trips outside the country by U.S. citizens just in 2012. So send us an email or better yet just give us a call at 877-517-4678 to discuss how Host Merchant Services can help your business stay ahead of the EMV curve.

Thieves use ATMs in multi-million dollar heist

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Late last week prosecutors unsealed Federal court documents that charge eight men with stealing $45 million dollars from numerous global banks to pay for high-end watches, expensive cars and other luxuries. In December 2012 and February of this year, the prosecutors allege that these men withdrew $2.8 million dollars from ATMs in only two attacks throughout the New York City area. The additional $42 million was withdrawn from other banks around the world by a team known as a “cashing crew.”

Authorities say that the global crime ring used prepaid debit cards in addition to hacked bank account numbers and PINs to withdraw the money in six continents and 27 different countries. The simple version of how they pulled this off is as follows: the hackers hacked their way into the banks’ systems and radically increased the values that were loaded onto the cards. Then with the information they obtained about the accounts, account and PIN numbers, used the cards to go on an ATM emptying spree.

In total, the operation needed over 40,000 individual transactions over the course of several months. It has been described as a “virtual criminal flash mob, going from machine to machine drawing as much money as they can before these accounts are shut down.” The eight suspects arrested in NYC followed what seemed to be a pre-planned route around the island of Manhattan, seemingly making a loop around Central Park. Those arrested had pictures on their cell phones of piles of $20 bills and also purchased a couple Rolex watches, a Porsche and Mercedes SUV.

This story not only caught my eye because of the sheer number of money stolen but also because of how the thieves went about pulling it off. In effect, they traded out ski masks and guns for computers and an internet connection. While the ringleaders were able to do the majority of the leg work online without much risk of being caught they still had to rely on “foot soldiers” to carry out the rest of the process.

The fact that this involved prepaid debit cards is what piqued our interest here at HMS as we value the security of debit and credit card processing. Attacks like this are a great reminder of why there are the comprehensive checks and security measures when it comes to card transactions. The fact that the authorities were able to trace these transactions, track down those involved, and arrest them is a testament to the vigilance of those enlisted to watch for fraud and other malicious activities when it comes to the financial services industry.

Being reactive is sometimes not enough though. Because of these recent events we are likely to see regulations and more security put in place in an effort to become more proactive in preventing attacks like this from occurring in the future. Who knows exactly what this will mean for the industry? For that we will just have to stay tuned.

Next-Day Funding Now Available

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The Official Merchant Services Blog would like to announce that Host Merchant Services has now added next-day funding to their already impressive line of services. Merchant services customers appreciate getting their deposits the next business day, as this is critical for funding payroll and inventory purchases for the week.

Merchants can now expect funding for MasterCard, Visa, and Discover transactions by the next business day, rather than within 48-72 hours, as is customary for other processors. All HMS Merchants can qualify. HMS long-term merchants will attain next-day funding, immediately upon request.

A merchant who currently has two day funding for example, would not see the money from a transaction processed at noon on a Monday, until Wednesday morning at the earliest, creating a 48-hour delay that could be the source of a merchants’ cash flow dilemma.

Any merchant that processes with Host Merchant Services and batches, or settles their terminal regularly in the evening, will receive those funds in their bank account by the next business day. Batching is the end-of-day or end-of-shift process in which the merchant balances and submits transactions for clearing and settlement. This allows executives to make quicker business decisions that impact their bottom line, as well as increase cash flow for the business.

Merchants should beware however that not all next day funding programs are created equal. While many companies claim to offer next day funding, merchant account providers have different capabilities and requirements resulting in very different times for fund dispersal.

Next day funding can benefit particular types of merchants like restaurants, principally when it comes to those that have heavy weekend volumes. For these merchants, next day funding can help them gain their weekend proceeds faster so they can be used to fund payroll and inventory purchases for the week. These restaurants would get their deposit for Friday, Saturday and Sunday activity on Monday instead of Tuesday, which is a very big cash flow benefit.

Host Merchant Services is always looking for ways to make it easier and more convenient to do business as well as provide added value in accelerating the growth of companies. With next day funding Host is enabling small business owners to improve their cash flow with faster funding of dollars earned through credit card sales. This corresponds with HMS’s ongoing goal to provide quality payment transactions solutions at the best price to merchants across the United States. Contact Host Merchant Services now to save money on your processing fees, as well as see your money a full day earlier than with other processors.

iPhones, NFC and Rewards Cards [2023 Update]

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Today the Official Merchant Services Blog brings NFC technology back into the spotlight, with a look at a pilot program U.S. Bancorp is running in two test cities. The company, one of the nation’s more tech-oriented big banks, is joining the ranks of companies testing near-field communication (NFC) technology by pairing a rewards credit card with Apple Inc.’s iPhone in Salt Lake City, Utah, and Portland, Oregon.

It’s been a while since we discussed the technology surrounding Near Field Communication, or NFC, so lets take a moment to recap. NFC is a short-range high frequency wireless communication technology which enables the exchange of data between devices with a touch. This touch capability allows for sharing, pairing, and transaction capability between the NFC devices. A smartphone or tablet that is NFC capable can be used as a keycard or an ID card. The same device can also be used to make credit card payments.

U.S. Bancorp, based in Minneapolis is offering new holders of its FlexPerks Travel Rewards Visa Signature card a special sleeve for the iPhone 4 and iPhone 4S. The sleeve contains a microNFC chip, and an antenna that facilitates payments by communicating with contactless point-of-sale terminals. Unlike a small but growing number of smart phones running Google Inc.’s Android operating system, the iPhone does not have a built-in NFC chip. With the sleeve and U.S. Bank’s new Go Mobile app, cardholders will be able to use their iPhones to make purchases at any merchant location that accepts the contactless Visa payWave card.

Cardholders will receive the case free for participating in the test. The case also includes a battery that extends the iPhone’s charge time by more than 50%, a feature U.S. Bank says will appeal to frequent travelers. The card itself is free in the first year but afterward charges a $49 annual fee.

U.S. Bank, already has offered the FlexPerks card with a Europay-MasterCard-Visa (EMV) chip so that international travelers can use their cards easily in EMV countries, which is now most of the industrialized world. The new test is part of an effort to learn how consumers and merchants take to NFC, according to Dominic Venturo, chief innovation officer at U.S. Bank Payment Services.

Some major players in mobile payments, notably PayPal Inc., Square Inc. and Starbucks Corp., are using non-NFC technologies such as browser-based systems or 2-D bar codes. NFC is a high-capacity, fast technology, but skeptics cite its need for chip-equipped phones and POS terminals as reasons to use other technologies. And while still small considering that the U.S. has about 8 million card-accepting locations, Venturo says the number of locations capable of accepting NFC payments, is now up to about 300,000 and growing.

U.S. Bank picked Salt Lake City and Portland for the NFC testing because of their tech-oriented populations and previous experience with high-tech card or Internet systems. Salt Lake City, for example, is one of the two test cities for Isis, the NFC mobile-payments joint venture of AT&T Mobility, Verizon Wireless and T-Mobile USA. Also, the Utah Transit Authority, the Salt Lake area’s mass-transit system, already accepts contactless cards. Google, meanwhile, picked Portland as its first test site for Google Offers, a competitor of Groupon Inc.’s daily-deal offers now available in about 40 cities. U.S. Bank has no end date for the test and in fact considers it a limited rollout that may expand later this year.

This technology is being embraced by some major companies in the e-commerce industry for its ability to process credit card transactions. PayPal purchased Zong for just that reason. Visa invested heavily in mobile payments, as seen by their marketing plans for the 2012 Olympics. Google is making its Google Wallet and Google+ beta work toward that same vision of mobile payments made through NFC-based touch technology. Only time will tell if the future of NFC payments is in fact bright and as usual, Host Merchant Services will keep you up to date on any new developments.

Industry Terms: E-Commerce [2023 Update]

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This is the latest installment in The Official Merchant Services Blog’s Knowledge Base effort. We want to make the payment processing industry’s terms and buzzwords clear. We want to remove any and all confusion merchants might have about how the industry works. Host Merchant Services promises: we deliver personal service and clarity. So we’re going to take some time to explain how everything works. This ongoing series is where we define industry related terms and slowly build up a knowledge base and as we get more and more of these completed, we’ll collect them in our resource archive for quick and easy access.

E-Commerce

Today’s term is Electronic Commerce, or E-Commerce for short. E-Commerce is the process of using the Internet or computer networks in order to buy or sell information, services, or products. This includes all transactions involved in conducting business over the fore mentioned networks. The act of buying or selling over these networks allows for secure paperless transactions to happen electronically. It has also given many businesses the ability to expand from local and regional markets to national and global markets.

Initially E-commerce just involved business to business transactions over private networks, it wasn’t until the mid 1990′s that it became completely open to the public. These businesses were using Electronic Data Interchange (EDI), which was a transfer of electronic data from computer to computer and Electronic Funds Transfer (EFT), which was an electronic transfer of money from one computer to another in order to do business with each other. Doing business like this guaranteed that the transactions would be completed in a faster and less expensive way. Advancing computer networking capabilities led to the public use of the Internet and opened the doors of E-commerce to the world.

E-Commerce has a major impact on the markets that businesses can reach. Businesses now have the ability to reach a large global market allowing for a greater return on their product sales. Retailers can sell more of a particular product at a lower cost, as a result of business being done online and not by man power alone, which gives them the ability to lower prices and increase sales. Although we may take advantage of E-commerce and the ease it creates in our daily lives, its benefit to the global economy is always changing and ever-increasing as technologies continue to develop. Everyday we see new businesses from all over the world implementing E-commerce into their business strategies, resulting in the growth of a “global community”.

Host Merchant Services offers a variety of E-commerce solutions to fit your business, including HMS Express, our own cutting edge in house payment gateway. HMS is able to interface with most of the major Payment Gateways out there, including Authorize.net. We also offer unparalleled protection for all of our merchants in the form of our PCI Compliance Initiative.

Interchange Settlement Update: Challengers Awaiting Final Approval

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Today the Official Merchant Services Blog brings you another update on the ongoing Interchange lawsuit settlement. We began talking about the possibility of ‘The Big Cash Comeback’ back when the settlement was first announced in July, and later we discussed the opposition to the settlement. Last week a federal appellate court denied a retailer’s appeal to review part of the controversial settlement in the massive credit card interchange case, clearing the way for the trial court to move toward final approval. At the same, the process of notifying the millions of merchants affected is getting under way.

Judge John Gleeson of the U.S. District Court in Brooklyn, N.Y., gave preliminary approval of the settlement on Nov. 9 and has set a hearing for next Sept. 13 to consider final approval.

Lawyers representing seven merchant trade groups as well as some individual merchants asked the Second Circuit Court to consider a narrow part of Gleeson’s preliminary approval, the provision of the settlement that releases defendants Visa Inc., MasterCard Inc., and some major banks from liability for interchange pricing policies. The provision is shaping up to be the key objection of the 1,200 retailers and trade associations since it would affect current and even future card-accepting merchants. This case, now seven years in the making, began when merchant plaintiffs accused the networks and banks of using anti-competitive practices in setting interchange rates.

Under the settlement announced in July by lawyers for both sides, the defendants will pay class merchants about $6 billion in damages, and Visa and MasterCard will provide another $1.2 billion in temporarily reduced interchange rates and ease up on certain rules, especially ones restricting merchants’ ability to add a surcharge for card transactions. In return, the networks want to be released from future court challenges by merchants regarding Interchange and network rules. The defendants also are paying about $550 million to a handful of large merchant plaintiffs that have now dropped their claims.

Judge Gleeson indicated that the standard for final approval is much higher than the one for preliminary approval, which means that the objecting plaintiffs still have some hope even though parts of the settlement already are going into effect or will be soon. For example, the networks have 60 days from Nov. 27, when the court entered Gleeson’s order implementing preliminary approval, to conform their rules to terms of the proposed settlement.

The district court meanwhile, is setting up the machinery to administer the settlement process. Gleeson appointed Kansas City, Kan.-based Epiq Systems Inc., a specialist in legal-systems administration and technology, to oversee notifications and related matters. That is no small task: the class settlement covers any merchant that has accepted Visa and MasterCard cards between Jan. 1, 2004, and late 2012. Experts estimate 6 million to 8 million affected merchants that must be notified. The settlement agreement also calls for merchant acquirers to assist in the notification process.

While we have discussed this settlement from different aspects previously, noting the advantages it would seem to give the Issuing Banks over merchants, the settlement seems to be proceeding along without much further adjustment or negotiation. Although it is not finalized yet, the dissenter’s cries seem to be going unheard, as they believe that the settlement protects the status quo more than anything, and will not change the way the networks set interchange. Host Merchant Services will keep you informed of all the latest news involving this landmark litigation.

Holiday E-Commerce Trends [2023 Update]

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Today the Official Merchant Services Blogbrings you some predictions for this holiday season. In particular, there are six key trends to watch. Over the last 12 months the E-commerce sector has rallied against challenging economic conditions and driven innovation in business and shopping models. A flurry of technical innovations, most notably the emergence and rapid adoption of Smart phone and Tablet technology, has transformed the shopper seller relationship. Fueled by mobile technology, E-commerce growth shows no sign of stopping. JP Morgan estimates that global E-commerce revenue will hit $963 billion next year.

1.) T-Commerce and M-Commerce

In 2011 web enabled mobile devices transformed E-commerce, opening up a new 24/7 channel to the consumer and creating innovative new ways to engage them, from QR codes to location based offers. In 2012 m-commerce will continue to gather momentum and could represent about 12% of e-commerce sales this holiday season, but it is T-commerce that’s particularly exciting. The rich functionality of the tablet shifts the traditionally transactional and bargain hunting online experience into a virtual store experience, making the web an almost tactile experience. Better still, mobile commerce is not exclusively for big brands with big budgets. Merchants large and small can harness the mobile channel without incurring heavy infrastructure costs. Smart mobile web devices are estimated to overtake the total number of PC’s in use, exceeding 1.8 billion, by 2013. With 1.8 billion consumers just a click away this is too big an opportunity for retailers to miss.

2.) Bricks and mortar in the cloud

The boundaries between online and offline worlds are becoming increasingly blurred, as retailers fuse their digital and real-world offerings. Barcode scanning services such as ShopSavvy help users find the best deal, by allowing them to scan the barcode and search for better offers online. However, the challenge with these applications is they fail to reward the store whose display instigated the purchase.

3.) Shopping with your social network

Getting a second opinion before committing to a purchase is nothing new, but now rather than taking a friend shopping you can take your entire social network with you. Retailers are becoming increasingly aware of the power of “the fan” and social will form an integral part of the E-commerce evolution in 2012. Retailers are now using social media outreach not just for brand awareness, but for product development and customer service too.

4.) Borderless shopping communities

2012 will see the rise of the local global e-marketplace. In 2012, international marketplace models will provide sellers of all sizes around the world with the opportunity to expand their operations internationally, without the cost intensive outlay traditionally associated with establishing local delivery models, storage facilities etc. Sellers will be able to dabble in international shopping communities and dedicate resources based on real world demand. This will open up opportunities with emerging markets, such as China, India and Brazil.

5.) Flexible, Local shipping models

According to a report by Forrester in January 2011, shipping issues were one of the most common reasons for cart abandonment in Europe. It’s true that the Internet has created a global marketplace, but local market shopping preferences must be taken into account. In 2012, flexible shopping models will be vital for growth.

6. ) Online shopping gets personal

The old adage “Information is power” takes on new meaning in 2012 as retailers seek to capture the attention spans of information savvy internet shoppers. Today’s online retailers can acquire huge volumes of data on both their potential and existing customers based on user browsing habits. In 2012 data exchange between retailers and social networks will begin to provide solid business models for social platforms and offer new insights into the mind of the shopper. What matters most to retailers however is how their marketing teams translate this wealth of data into meaningful and timely communications with customers. To engage consumers in 2012 and beyond, retailers must learn how to harness user specific data to provide timely, personalized and relevant communications.

Host Merchant Services provides e-commerce solutions to our merchants that let them take payments smoothly and efficiently. We can help you navigate through the busy bustle of holiday shopping and find the transaction processing services that serve you best. The Official Merchant Services Blogwill also continue to provide insight on how merchants can maximize these opportunities.

Merchants Appeal Key Part Of Interchange Settlement

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Today the Official Merchant Services Blog brings you the most recent developments in the ongoing credit card interchange settlement lawsuit.

Merchants opposing the pending credit card interchange case filed an appeal last week challenging the court’s preliminary approval of a key part of the settlement. The appeal, filed by four merchants and seven merchant trade groups, asks the Second U.S. Circuit Court of Appeals to nullify the lower court’s preliminary approval. The merchants are collectively challenging a provision of the settlement that releases defendants Visa Inc., MasterCard Inc., and a handful of major banks from liability for interchange pricing policies. Meaning that merchants could no longer sue Visa or MasterCard for interchange policies they deem unfair.

“This settlement has fatal legal defects and should not get preliminary approval. We look forward to presenting the problems we see in this proposal to the Second Circuit Court of Appeals,” said Jeffrey Shinder, the merchant group’s attorney and managing partner at Constantine Cannon LLC, New York, N.Y.

About 1,200 merchants and trade groups have raised objections to the agreement since it was reached in July. In the deal, the card networks and banks agreed to temporary credit card interchange relief valued at $1.2 billion and $6 billion in damage payments for merchants along with relaxation of certain network rules, including ones that restricted surcharging. The pact received preliminary approval from the Brooklyn, N.Y.-based district court’s Judge John Gleeson on Nov. 9.

Besides the liability release, merchants have objected that the settlement does nothing to reform the networks’ interchange processes and cements in place a number of anti-competitive practices. “The merchant community is deeply committed to reforms that bring transparency and competition to the broken electronic payments market. The volume and diversity of those objecting to this flawed proposal is remarkable and continues to grow,” Shinder said in his statement.

The 11 merchants and merchant groups filing the appeal are: Coborn’s Inc., D’Agostino Supermarkets Inc., Jetro Holdings Inc., Jetro Cash & Carry Enterprises LLC, Affiliated Foods Midwest Cooperative Inc., National Association of Convenience Stores, National Association of Truck Stop Operators, National Community Pharmacists Association, National Cooperative Grocers Association, National Grocers Association, and the National Restaurant Association.

Opponents said the plan would protect what they view as anti-competitive interchange practices from further challenges by merchants, even from merchants that don’t yet exist. Opponents also questioned the value of the new surcharging freedoms, noting that 10 states prohibit the practice. This settlement attempts to force a one-size-fits-all solution onto a wildly diverse group of merchants, which may be extremely unsuccessful.

We have discussed this settlement from different aspects previously, noting the advantages it would seem to give the Issuing Banks over merchants. Although it is not finalized yet, the dissenter’s cries seem to be going relatively unheard, as they believe that the settlement protects the status quo more than anything, and will not change the way the networks set interchange. Host Merchant Services will keep you informed of all the latest news involving this legal battle between the merchants and the card-issuing giants.

Small Business Saturday: Nov. 24th

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Today, the Official Merchant Services Blog shines a light on a little known holiday that falls between Black Friday, and Cyber Monday called Small Business Saturday.

Since Host Merchant Services has many small businesses in its customer base, we wanted to take a moment to spotlight this newer day of shopping focus and frenzy. This is the third year that American Express is promoting Small Business Saturday, which encourages consumers to shop from small, local businesses on Nov. 24.

The Basics

First of all, what is Small Business Saturday? It is a shopping holiday created by American Express, held on the Saturday after Thanksgiving during one of the busiest shopping periods of the year. It’s not that old. It was first celebrated on November 27, 2010. Small Business Saturday is designed to be a counterpart to Black Friday and Cyber Monday –– which feature big box retail and e-commerce stores respectively. Small Business Saturday encourages holiday shoppers to patronize smaller, local retail businesses.

Benefits For Consumers

The most basic perk to the Small Business Saturday campaign is that it gives money back to consumers for shopping at local small businesses. As defined by American Express at their Small Business Saturday Page here: “You can receive a one-time $25 statement credit when you register any eligible American Express^® Card and use that Card to make a purchase of $25 or more at a small business on November 24, 2012.”

Benefits For Merchants

A survey by American Express found 93% of consumers believe shopping at small businesses is important, and are backing that sentiment up by spending about a third of their discretionary income at local small businesses. This prompted AMEX to initiate the campaign in the first place. And if you are a small business merchant, AMEX is going the extra mile to get you involved in the perks and promotions of this holiday.

Even if you are a late-comer to this event, there is still quite a lot of value to be had from participating in Small Business Saturday. The $25 credit program applies no matter what else you do. But there’s also these amazing resources still available:

From AMEX you can get free in-store signage, and a free online marketing kit.
AMEX also offers a free personalized ad, which geo-targets potential customers
You can use AMEX’s Go Social app to create mobile-based deals for your American Express card-wielding customers.
A joint venture from Google and YouTube offers up My Business Story which lets you create custom videos using YouTube’s editing tool to entice your customers.
For inspiration, you can even view some Small Business Saturday Success Stories on American Express’s website.

Too Early To Tell?

So what do you think? Will Small Business Saturday catch on? Cyber Monday seems to be gaining some traction, fueled by the rapid growth in online shopping and e-commerce, and standing on the precipice of a predicted boom in mobile payment business. Black Friday is still going strong, with big chains like Toys”R”Us and BestBuy fueling it year in and year out. Is there room for Small Business Saturday? Are you a small business merchant and have you participated in this event last year? Will you be doing it this year? Feel free to share you thoughts and insights on this bold campaign from AMEX.

Interchange Settlement Given Preliminary OK

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On Friday, the Judge presiding over the controversial Interchange Settlement case in Brooklyn, N.Y. gave preliminary approval to the settlement of credit card interchange litigation announced July 13. The Official Merchant Services Blog recently explained why the controversial Interchange settlement was being considered for preliminary approval, despite the backlash from merchants and large corporations. We also began talking about the possibility of ‘The Big Cash Comeback’ when the settlement was first announced, and later we discussed the opposition to the settlement.

U.S. District Judge John Gleeson indicated in late October that his cursory review showed that the settlement probably met the legal requirements for preliminary approval. He scheduled a hearing for Nov. 9 to get input from lawyers for the merchant plaintiffs and network and bank defendants. The judge said final approval requires a higher standard, and lawyers don’t expect final sign-off anytime before 2013. Opponents argued that the plan didn’t even meet the lower threshold for a preliminary approval.

The National Retail Federation, the leading retail-industry trade group and an outspoken foe of the agreement, quickly issued a statement saying it would “explore all legal options.” But the Electronic Payments Coalition, a lobbying group of card networks and banks, said it viewed Gleeson’s ruling “as further indication that this historic settlement is a fair and balanced resolution to the epic swipe-fee battle.”

The NRF’s Mallory Duncan said in a statement that “retailers, their customers and competition would suffer irreparable harm if this one-sided deal is allowed to move forward. We will consult with our attorneys and act as soon as possible to correct this injustice.” The NRF is not a plaintiff in this case, and made no mention of which legal remedies it would pursue.

MasterCard Inc. general counsel Noah Hanft said in a statement that the settlement “was reached with the assistance of the court and was supported by the merchant class representing millions of large and small retailers, and prominent trade groups across the country.” MasterCard also said it remains confident that “the court will grant final approval in the coming months.”

Visa Inc. said “this settlement is a fair and reasonable compromise for all parties. It is the result of two years of negotiation between retailers, their legal counsel, the networks, financial institutions and two highly regarded mediators under the supervision of the court.”

Merchants and some trade associations sued Visa, MasterCard, and about a dozen banks in 2005 alleging credit card interchange is unfair under federal antitrust laws. With a trial set for September 2012, the parties reached a settlement that calls for the defendants to pay more than $6 billion in damages and temporarily lower credit interchange to the tune of $1.2 billion. The networks also are to grant relief from some of their rules, including an easing of restrictions on surcharging, and let merchants negotiate in groups in the interchange-setting process. In return, the merchants are to agree not to sue the networks over interchange and rules in the future.

While we have discussed this settlement from different aspects previously, noting the advantages it would seem to give the Issuing Banks over merchants, the settlement seems to be proceeding along without any further adjustment or negotiation. Although it is not finalized yet, the dissenter’s cries seem to be going unheard, as they believe that the settlement protects the status quo more than anything, and will not change the way the networks set interchange. Host Merchant Services will keep you informed of all the latest news involving this legal battle between the merchants and the card-issuing giants.

Tag Archives: MasterCard

What is EMV Chip Card Technology?

Thieves use ATMs in multi-million dollar heist

Next-Day Funding Now Available

iPhones, NFC and Rewards Cards [2023 Update]

Industry Terms: E-Commerce [2023 Update]

E-Commerce

Interchange Settlement Update: Challengers Awaiting Final Approval

Holiday E-Commerce Trends [2023 Update]

1.) T-Commerce and M-Commerce

2.) Bricks and mortar in the cloud

3.) Shopping with your social network

4.) Borderless shopping communities

5.) Flexible, Local shipping models

6. ) Online shopping gets personal

Merchants Appeal Key Part Of Interchange Settlement

Small Business Saturday: Nov. 24th

Interchange Settlement Given Preliminary OK

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