Common wisdom around the payments industry has it that if merchants representing 25% of all debit and credit volume drop out of the recent interchange antitrust settlement, the deal would be dead, it turns out that’s not so easily done, nor is it automatic. In fact, the terms of the settlement make it very unlikely indeed that the threshold can be reached. And even if that unlikely event were to occur, there is nothing automatic about what would happen next.
Following up on questions regarding last week’s Daily Scoop item on the issue, we’ve found that the settlement terms are pretty restrictive. Turns out that if the 25% threshold is reached, MasterCard and Visa have the option to opt out of the settlement and thus kill it, but they’re not required to do that. They could instead choose to reopen negotiations, and that’s a more likely scenario.
Two other things worth noting: To date, from everything we can determine, none of the merchants who are party to the settlement have actually opted out, and even if all those who have publicly blasted the settlement chose to exempt themselves, that would still be well short of the 25% threshold. The federal judge in cha=rge of the case, of course, could decline to sign off on the deal, but there has been no indication that’s anything more than a remote possibility.