Sacramento Merchants to Benefit from Credit Card Settlement
July 18, 2012
Sacramento small business owners are set to join millions of other nationwide merchants in reaping the benefits of a class-action settlement. According to a recent article in the New York Times, the nation's major credit card companies have settled an antitrust claim filed by thousands of merchant plaintiffs. The good news for local Sacramento businesses is that they don't have to have been part of the lawsuit to benefit from it.
The gist of the lawsuit was the accusation that the major credit card companies were colluding with one another to prevent merchants from adding surcharges to business transactions where the customer used a credit card. In essence, merchants were having to pay fees to the credit card companies in order to be able to accept payment with those brands of credit cards, but the merchants themselves were unable to recoup the money from their customers.
On average, it costs a small business owner a few cents on the dollar to be able to accept payment in the form of a credit card transaction. Merchants sued on the theory that they should be able to pass those costs onto their customers, so as not to affect their profitability. The credit card companies argued that if the customers were forced to bear the cost of each credit card transaction, the customers would be less inclined to keep using credit cards altogether. After all, if cash or checks are free to use as payment for merchant products or services, why would customers even choose to own a credit card?
Area merchants argue that despite an initial surge in consumer prices, adding a surcharge would not permanently burden consumers. It would, instead, force the banks and the credit card companies to reduce their fees so that merchants would no longer have to place a surcharge on purchases.
In short, small business attorneys view the settlement as a victory for small business owners, even if it is at the expense of consumers. Where once a small business owner had to offer a marginal discount for transactions paid in cash or check, now he or she can legitimately add a surcharge for transactions paid by credit card. The difference can be quite significant for business owners who already have slim profit margins, as it could add several cents on every dollar in business revenue.
If it is still unclear how this settlement will affect your business, consider speaking to a Sacramento small business lawyer. Your lawyer can help you determine what price adjustments you need to make to shift the costs back to the consumers and the credit card companies, while keeping your prices competitive in the market in which you operate.
Additionally, if you are a Sacramento business owner who believes you may be entitled to a share of the settlement proceeds, contact your attorney for a professional interpretation of the settlement language. In class action settlements, the methods of collecting your share can often be complicated, requiring you to jump through a number of hoops to collect what is already yours. A skilled Sacramento business attorney can take the guesswork out of the settlement distribution process.