Credit Card Fees Expert WitnessesIntroduction:

In September, Visa and Mastercard reached a large settlement in a case over the fees they charge retailers to conduct credit card transactions. See, e.g., Aparajita Saxena& Brendan Pierson, “Visa, Mastercard reach $6.2 billion settlement over card-swipe fees,” Reuters, Sep. 18, 2018, at (last visited Oct. 17, 2018). The settlement was the largest antitrust cash award to date, and the lawsuit had been ongoing for a number of years. See id.At issue was whether credit card companies had been forcing merchants to accept certain cards, and whether the fees assessed and billed to retailers are legitimate. See id.This article discusses the legal controversy and addresses how experts play an integral role in litigation of this nature.


The lawsuit concerning credit card fees was filed over a decade ago, and it involved 12 million retailers. See id. The plaintiffs argued that the defendants violated “federal antitrust laws by forcing merchants to pay swipe fees and prohibiting them from directing consumers toward other methods of payment.” Id. The case has been heard at the district and appellate court levels, but certiorari was rejected by the U.S. Supreme Court. See id.The suit was first filed against the banks that issued the credit cards because, at the time, Visa and Mastercard “were owned by the banks and not public.”Associated Press, “Visa and Mastercard agree to settle part of lawsuit over credit card swipe fees,” reprinted in Los Angeles Times, Sep. 18, 2018.

Price-fixing was one of the primary claims made, and the plaintiffs argued that “Visa and MasterCard conspired to fix fees that are charged to stores for handling credit card payments.” The Washington Post, “Visa, MasterCard to settle part of merchants’ lawsuit over swipe fees,” Sep. 18, 2018. In determining whether price-fixing occurred, which violates federal antitrust law, litigants and attorneys rely upon expert witness insight. Antitrust experts can help address what an industry standard is and whether that standard is adhered to. Perhaps more importantly, they can make a persuasive case about the behavior at issue and customary protocols, providing authoritative evidence as to the legality and desirability of specific policies.

Although part of the lawsuit may have been settled, two other components of the litigation remain unresolved. See id. As The Washington Postexplains, two issues must be addressed: “a dispute over the rules Visa and MasterCard impose to accept their cards, and the merchants who chose not to participate in the settlement.” Id.The rules credit card companies enact regarding when businesses must accept their cards are hotly-disputed, and the plaintiffs claim they have been forced to take credit cards from consumers, which causes them to incur unfair fees. See, e.g., Aparajita Saxena& Brendan Pierson, supra. Retailers object to the cost of the fees as well as how those fees are applied. See, e.g., Dennis Green, “Stores and credit-card companies are in an all-out war over fees,” Business Insider, Sep. 27, 2018.

At the heart of the lawsuit is the “honor all cards” rule, “which requires merchants that accept Visa or MasterCard to take all of their credit cards.” Alex Van Abbema, “Target among retailers pushing for the right to reject certain rewards credit cards,” Minneapolis-St. Paul Business Journal, Sep. 26, 2018. Retailers argue the “honor all cards” policy is unjust because merchants pay a higher fee for certain cards. See, e.g., id.The plaintiffs have expressed that they should have the right to reject cards with greater fees. See id.They contend the rule is unfair because businesses are not permitted to negotiate with credit card providers—the policy is all or nothing. See id.According to The Wall Street Journal, some retailers may opt out of the settlement, so they can preserve their ability to continue the litigation before a court. SeeAnnaMaria Andriotis, “Shoppers Love Rewards Cards. Retailers Hate Them.,” The Wall Street Journal, Sep. 25, 2018.

There are several angles to consider with respect to the “honor all cards” policy. On the one hand, businesses can present expert testimony that shows how the rule negatively impacts their bottom lines, and experts can also provide evidence to demonstrate that the rule is an antitrust violation. In addition, plaintiffs may wish to consult experts in contracts, who may argue that not allowing retailers to have a say in the credit card agreement unfairly benefits one side. Experts for retailers may claim that the “honor all cards” policy disproportionately harms small businesses and may even force them to close their doors. Witnesses who specialize in business and finance may offer examples of analogous situations where parties do not have to choose between all or nothing agreements. For example, medical providers often accept some plans an insurance company offers, but not all of them. Experts may also allege that the fees themselves are not the problem—the variation in cost is, so credit card companies could resolve this matter by simply levying a flat fee on retailers, which could be a more just arrangement.

For the defendants, expert witnesses may argue that the “honor all cards” policy is valid on several grounds. First, contract experts could proffer evidence demonstrating the benefits retailers enjoy by accepting the credit card agreement. Economic data showing increased profits for merchants that accept credit cards may indicate the validity of the defendants’ rule. Many customers would not make purchases if their cards were not accepted, and expert testimony to that effect can counter the narrative of an allegedly unjust policy. Statistics indicating how much more likely consumers are to patronize a business if they can use their rewards cards (which have a higher transaction fee) may also help the defendants’ case. Experts may wish to compare the “honor all cards” policy to similar rules in other industries to prove that the arrangement is legitimate. Finally, expert witnesses may appeal to the principles behind antirust and consumer protection laws, arguing that individuals will suffer if businesses do not have to honor every card a company issues.


The settlement offered in September was a large one, but it is unclear if every merchant will opt into it. See, e.g., id.One large retailer is already contemplating rejecting the compromise and may prefer to resolve the legal issues in court. See Alex Van Abbema, supra. Regardless, expert witnesses have an essential role in litigation of this kind. Their insight may assist both sides in assessing the merit of their claims and deciding upon the best way to move forward.