1. 1 NRF General Counsel’s Forum The Continuing Challenge Posed by Visa and MasterCard Presented by Jeffrey I. Shinder Constantine Cannon LLP Managing Partner, NY Office January 13, 2010

2. 2 The Continuing Challenge Posed by Visa and MasterCard – Interchange Fees  Across the board credit card interchange increases –New tiers for premium and rewards cards –Card issuers upgraded or reclassified cards as premium cards  Increases in signature debit and PIN debit rates

3. 3 The Continuing Challenge Posed by Visa and MasterCard – Interchange Fees  Current Merchant Initiatives –Legislative –Regulatory –Litigation  Class decision upcoming

4. 4 The Continuing Challenge Posed by Visa and MasterCard – Other Fees  Network Access Fees  Cross Border Fees

5. 5 The Continuing Challenge Posed by Visa and MasterCard – PIN Debit Suppression of PIN Debit  Contactless –20 million contactless debit cards –Banks subsidizing deployment of terminals –Chase and other debit issuers have disabled PIN Debit feature  Over the Internet

6. 6 The Continuing Challenge Posed by Visa and MasterCard – Rules  Acceptance Rules –Merchants can’t steer to other card types –Merchants can’t surcharge  Merchants can’t steer to PIN debit, cash or checks cash or checks

7. 7 The Continuing Challenge Posed by Visa and MasterCard – PCIC  Payment Card Data Security –Merchants can be held liable for breaches  Even if merchant has been certified as compliant –Network assesses fines that are passed on to the merchant –Acquirers have authority via merchant agreements to seize merchant funds before penalties are assessed

8. 8 The Continuing Challenge Posed by Visa and MasterCard– Merchant Agreements  Agreements are often one-sided and favor acquirer  Merchants are required to comply with network operating rules that merchants usually don’t see  Merchants are responsible for ensuring that all suppliers and vendors are PCI compliant

9. 9 More on Merchant Agreements…  Acquirers can change the merchants’ pricing with limited or no notice  Acquirers can add new fees to be charged with limited or no notice  Allow acquirer to declare a breach of the agreement with no cure period  Acquirers can unilaterally establish reserve accounts, seize merchant funds, and retain merchant funds

10. 10 More on Merchant Agreements…  Grant acquirer a security interest in merchants’ funds and other assets, which may violate other lending covenants the merchant has agreed to  Have one-way liquidated damages and indemnification and no-warranty clauses  In event of dispute, waive the right to a jury trial

11. 11 Visit our website: www.constantinecannon.com Visit our blog:www.antitrusttoday.com Jeffrey I. Shinder Constantine Cannon LLP 450 Lexington Avenue New York, NY 10017 jshinder@constantinecannon.com212-350-2709