Now Asda, Morrisons And Europe Are Going After Visa And MasterCard Over Interchange Too

First there was the $7.25 billion interchange settlement that big chains mostly detested, largely because it would outlaw future interchange lawsuits. Then came a flurry of retailer lawsuits against Visa (NYSE:V) and MasterCard (NYSE:MA), charging that the card brands' fee rules violate antitrust law. Now three UK retailers—Walmart's (NYSE:WMT) Asda, Morrisons and apparel group Arcadia—have sued Visa over interchange in London, and eight other retailers sued Visa separately at the same time.

Not to be left out, the European Union's financial services commissioner, Michel Barnier, unveiled plans on July 24 to cut interchange fees in the EU to 0.3 percent for credit card transactions and 0.2 percent for debit cards, which will eventually cut the retailer fees to Visa and MasterCard by about $8 billion a year. The interchange caps will initially apply to cross-border transactions, then be expanded to all card payments after 22 months (but no start date for that has been set).

Details of the lawsuit by Asda, Morrisons and Arcadia aren't available yet, and neither side is commenting. But it looks like it will take the same general shape as a lawsuit filed against MasterCard that's headed for trial. Asda, Morrisons and about a dozen other retailers are plaintiffs in that one.

Not surprisingly, the London lawsuits and the interchange caps are connected. The EU has been investigating Visa and MasterCard for a decade over allegations of anticompetitive behavior when it comes to interchange fees. It ruled in 2007 that MasterCard's cross-border interchange fees are anti-competitive, which MasterCard is currently in the process of appealing.

And it's also probably no coincidence that the new caps are aimed at Visa and MasterCard, but won't apply to American Express (NYSE:AXP), PayPal (NASDAQ:EBAY) and other payment networks that don't have banks in the loop. (Let's leave aside the irony that American Express will get to keep charging what were already higher interchange rates. High prices aren't illegal—what's getting Visa and MasterCard in trouble is collusion with its issuing and acquiring banks.)

The policy of Visa and MasterCard for years has been to fight, then bite the bullet and settle, these interchange lawsuits by retailers. Now they're facing the increasingly likely scenario of Durbin-like caps in Europe on both debit and credit, along with a series of legal battles in the U.S. over whether they're allowed to set default rates at all.

But while all this sounds like gloom and doom for the big card brands, it's worth keeping in mind that they've been one step ahead of the law before. BankAmericard and MasterCharge got their start mailing out unsolicited cards for a decade—which created a big enough mess that Congress made it illegal. The card brands shifted from bank alliances to public companies and managed to get antitrust exemptions from the EU and settle their way out of U.S. Justice Department investigations.

The new wave of lawsuits and the EU's caps may mean the end of interchange as we know it. Just don't assume it means the card brands won't find a new way to take their cut.