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“I’ve Been Satisfied Since Day One:” An Exclusive Interview with the Plaintiff in the Visa-MasterCard Antitrust Lawsuit

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In a landmark antitrust settlement, Visa and MasterCard agreed to pay merchants $7.25 billion to settle charges that they colluded to fix interchange fees, which are paid by the merchant every time a customer pays with plastic.

But the largest antitrust settlement in history isn’t enough to win the approval of many major merchants. Indeed, the National Retail Federation asked that a judge reject the settlement when he hears the case tomorrow.

To hear these trade groups talk about it, you’d think all merchants want Judge John Gleeson to reject the agreement between merchants on one hand, and Visa and MasterCard on the other, when he hears preliminary arguments.

But the original plaintiff in the case says differently. Mitch Goldstone, President and CEO of ScanMyPhotos.com, first brought the case against Visa and MasterCard in 2005. Seven years later, the lawsuit is – well, might be – over. And though he stands opposed to Safeway, Walmart and over 1,200 other merchants, Goldstone believes the deal is in retailers’ best interest. NerdWallet conducted an exclusive interview with Goldstone, less than a week before Gleeson hands down his preliminary opinion.

NerdWallet: A lot of merchants aren’t happy with this settlement. They say it doesn’t change the status quo, that it leaves Visa and MasterCard’s monopoly power intact.

Mitch Goldstone: I’ve been satisfied with this settlement since day one. There really was no staunch advocate standing up against Visa and MasterCard before me. I’ve been their archenemy, but we’re on the same side now. That speaks to how well we’ve been negotiating.

Finally, after all these decades of Visa and MasterCard having absolute market power, we’re finally leveling the playing field.

NW: If merchants weren’t thrilled, Wall Street certainly was. Visa and MasterCard’s stocks rose about 3% after the settlement was announced.

MG: Wall Street is pleased because if the suit went to trial, it could be catastrophic for the banks – investors realized that hundreds of billions were at stake. They were relieved to have a firm number.

But that’s a double-edged sword: If the suit went to trial, we’d be looking at another decade of litigation at an enormous cost. We’d also be at the mercy of the jury, and that exposure could be ruinous. We got a settlement three times larger than any other in U.S. history – a complete victory.

NW: The National Retail Federation seems to disagree.

MG: Their dissent is entirely misguided, and based on a lot of misinformation. The merchants leading the opposition aren’t offering any alternatives, and their arguments are faulty. At the end of the day, millions of merchants will be entirely happy when they see how much they’re getting.

And the ones that are making the most noise, the ones that hire PR firms and lawyers to wage a battle that’s already been won – they’re doing it for political reasons. They want a Durbin Amendment for credit cards [the law that went into effect last year limiting interchange fees on debit cards].

NW: One of the unanticipated results of Durbin was the increase in big-bank checking fees. Would credit card legislation do the same?

MG: Banks can’t get away with it anymore. Bank of America learned their lesson with the $5 debit card fee – after the social media backlash, they pulled out of that ill-conceived price increase. Given consumers’ increasingly vocal advocacy, I don’t think there will be any adverse fees.

NW: Merchants now have the ability to levy credit card surcharges. But a number of them say they can’t, because of that same consumer backlash.

MG: I don’t think a surcharge will take place, nor will it have to. Simply having the surcharge in our arsenal against the banks will be enough. That’s what happened in Australia: Merchants were able to surcharge, and just the threat was enough to not only keep the fees in check, but to substantially lower them.

NW: Merchants complain that nothing’s changed, that Visa and MasterCard can still fix prices. Looking forward, what will be different?

MG: The landscape is completely different, and Visa and MasterCard are finally being challenged. New technologies like Square are providing competition, building a new payments industry and leveling the playing field in the process.

Everyone who accepts credit cards is going to win.