Sanctions of Russia
On March 20, 2014, Visa and MasterCard suspended servicing some Russian banks in Crimea:[41] Rossiya Bank, Sobinbank, SMP Bank and Investcapitalbank,[42] after the USA issued sanctions against the Russian government due to the 2014 Russian military intervention in Ukraine.WikiLeaks
Visa Europe began suspending payments to WikiLeaks on December 7, 2010.[43] The company said it was awaiting an investigation into 'the nature of its business and whether it contravenes Visa operating rules' – though it did not go into details.[44] In return Datacell, the IT company that enables WikiLeaks to accept credit and debit card donations, announced that it will take legal action against Visa Europe.[45] On December 8, the group Anonymous performed a DDoS attack on visa.com[clarification needed], bringing the site down.[46] Although "the Norway-based financial services company Teller AS, which Visa ordered to look into WikiLeaks and its fundraising body, the Sunshine Press, found no proof of any wrongdoing, Salon reported in January 2011 that Visa Europe "would continue blocking donations to the secret-spilling site until it completes its own investigation".[44]The United Nations High Commissioner for Human Rights Navi Pillay stated that Visa may be "violating WikiLeaks' right to freedom of expression" by withdrawing their services.[47]
In July 2012, the Reykjavík District Court decided that Valitor (the Icelandic partner of Visa and MasterCard) was violating the law when it prevented donations to the site by credit card. It was ruled that the donations be allowed to return to the site within 14 days or they would be fined in the amount of US$6,000 per day.[48]
Litigation and regulatory actions
Anti-trust lawsuit by ATM operators
MasterCard, along with Visa, have been sued in a class action by ATM operators that claims the credit card networks' rules effectively fix ATM access fees.[49] The suit claims that this is a restraint on trade in violation of federal law. The lawsuit was filed by the National ATM Council and independent operators of automated teller machines. More specifically, it is alleged that MasterCard's and Visa's network rules prohibit ATM operators from offering lower prices for transactions over PIN-debit networks that are not affiliated with Visa or MasterCard. The suit says that this price fixing artificially raises the price that consumers pay using ATMs, limits the revenue that ATM-operators earn, and violates the Sherman Act's prohibition against unreasonable restraints of trade. Johnathan Rubin, an attorney for the plaintiffs said, "Visa and MasterCard are the ringleaders, organizers, and enforcers of a conspiracy among U.S. banks to fix the price of ATM access fees in order to keep the competition at bay."[50]Debit card swipe fees
Visa settled a 1996 antitrust lawsuit brought by a class of U.S. merchants, including Wal-Mart, for billions of dollars in 2003. Over 4 million class members were represented by the plaintiffs. According to a website associated with the suit,[51] Visa and MasterCard settled the plaintiffs' claims for a total of $3.05 billion. Visa's share of this settlement is reported to have been the larger.U.S. Justice Department actions
In October 2010, Visa and MasterCard reached a settlement with the U.S. Justice Department in another antitrust case. The companies agreed to allow merchants displaying their logos to decline certain types of cards (because interchange fees differ), or to offer consumers discounts for using cheaper cards.[52]In 1998 the Department of Justice sued Visa over rules prohibiting its issuing banks from doing business with American Express and Discover. The Department of Justice won its case at trial in 2001 and the verdict was upheld on appeal. American Express and Discover filed suit as well.[53]
Anti-trust issues in Europe
In 2002 the European Commission exempted Visa’s multilateral interchange fees from Article 81 of the EC Treaty that prohibits anti-competitive arrangements.[54] However, this exemption expired on December 31, 2007. In the United Kingdom, MasterCard has reduced its interchange fees while it is under investigation by the Office of Fair Trading.In January 2007, the European Commission issued the results of a two-year inquiry into the retail banking sector. The report focuses on payment cards and interchange fees. Upon publishing the report, Commissioner Neelie Kroes said the "present level of interchange fees in many of the schemes we have examined does not seem justified." The report called for further study of the issue.[55]
On March 26, 2008, the European Commission opened an investigation into Visa's multilateral interchange fees for cross-border transactions within the EEA as well as into the "Honor All Cards" rule (under which merchants are required to accept all valid Visa-branded cards).[56][needs update]
The antitrust authorities of EU Member States other than the United Kingdom are also investigating MasterCard's and Visa's interchange fees. For example, on January 4, 2007, the Polish Office of Competition and Consumer Protection fined twenty banks a total of PLN 164 million (about $56 million) for jointly setting MasterCard's and Visa's interchange fees.[57]
In December 2010, Visa reached a settlement with the European Union in yet another antitrust case, promising to reduce debit card payments to 0.2 percent of a purchase.[58] A senior official from the European Central Bank called for a break-up of the Visa/MasterCard duopoly by creation of a new European debit card for use in the Single Euro Payments Area (SEPA).[59] After Visa's blocking of payments to WikiLeaks, members of the European Parliament expressed concern that payments from European citizens to a European corporation could apparently be blocked by the US, and called for a further reduction in the dominance of Visa and MasterCard in the European payment system.[60]
Payment Card Interchange Fee and Merchant Discount Antitrust Litigation
On November 27, 2012, a federal judge entered an order granting preliminary approval to a proposed settlement to a class-action lawsuit filed in 2005 by merchants and trade associations against Visa, MasterCard, and many credit card issuing banks. The suit was filed due to price fixing and other anti-competitive trade practices employed by MasterCard and Visa. A majority of named-class plaintiffs have objected and vowed to opt out of the settlement. Opponents object to provisions that would bar future lawsuits and even prevent merchants from opting out of significant portions of the proposed settlement. Stephen Neuwirth, a lawyer representing Home Depot, said, “It’s so obvious Visa and MasterCard were prepared to make a large payment because of the scope of the releases being given. It’s all one quid pro quo and merchants like the Home Depot are being denied the chance to opt out of that quid pro quo and say this is a bad deal.”[61]Plaintiffs allege that Visa, MasterCard, and major credit card issuers engaged in a conspiracy to fix interchange fees, also known as swipe fees, that are charged to merchants for the privilege of accepting payment cards at artificially high levels. In their complaint, the plaintiffs also alleged that the defendants unfairly interfere with merchants from encouraging customers to use less expensive forms of payment such as lower-cost cards, cash, and checks.[61]
The settlement provides for the cash equivalent of a 10 basis-point reduction (0.1 percent) of swipe fees charged to merchants for a period of eight months. This eight-month period would probably begin in the middle of 2013. The total value of the settlement will be about $7.25 billion.[61] According to court filings, Target, Wal-Mart, Home Depot, Neiman Marcus, Saks, and 1,200 other plaintiffs oppose the settlement. A group of large merchants including Kroger, Walgreens, and Safeway have reached a separate agreement with the defendants over swipe fees.[61] The NACS, for example, harshly criticised the settlement and is urging its members to opt out.
Tom Robinson, chairman of NACS and president of Robinson Oil, said, "This proposed settlement allows the card companies to continue to dictate the prices banks charge and the rules that constrain the market including for emerging payment methods, particularly mobile payments. Consumers and merchants ultimately will pay more as a result of this agreement — without any relief in sight."[62] Josh Floum, general counsel for Visa, responded, “Our belief that the agreement will eventually receive final approval was strengthened today. As we have said from the beginning, this settlement is a fair and reasonable compromise for all parties.”[61]
In January 2013, the United States Court of Appeals for the Second Circuit ruled that any appeals against the settlement that received preliminary approval in November 2012 would not be heard until objections to the settlement are filed and considered by the trial court in September 2013. The practical effect of this ruling was to allow settlement notices to be sent to eligible merchants.[63]
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