A Complex System
The key is the processing companies—rather than the banks issuing cards—who
act like the air traffic controllers for the system. The processing companies
keep the transactions flowing.
But when these companies trip up, the fallout can be ugly—and show
just how much power the processing companies have give and take money. The
Alabama state court decision Pushmataha Plantation v. Nova Corp. et al.
offers one example.
Pushmataha Plantation was a tourist destination in Alabama. Nova was one
of the largest credit card processing companies in the U.S. Pushmataha sued
Nova for damages related to alleged illegal, improper and unrelated fees that
Nova charged to Pushmataha’s merchant accounts.
In June 1998, Pushmataha entered into a merchant bank card services agreement
with Nova and purchased point-of-sale equipment from Nova for the purpose
of processing credit card transactions.
In January 1999, Pushmataha received a statement for the month of December
1998 from Nova. In this statement, the plantation was informed for the first
time that it would be assessed a one-time fee of $40 for Year 2000 compliance
efforts Nova had made on its behalf in 1998.
In February 1999, Pushmataha received a statement for the month of January
1999. In that statement, the plantation was informed that Nova had charged
a “miscellaneous fee” of $40.00.
The plantation claimed that Nova’s practice of charging miscellaneous
fees was improper and not supported by any contractual agreement between the
two parties. The plantation went on to argue:
…No disclosure is made at the time of the merchant services agreement
that these charges will be imposed and no agreement is reached whether the
customer agrees to pay these charges or fees. The fees and charges are imposed
unilaterally by [Nova] without prior disclosure to the customer.
The plantation wanted the court to certify a class action lawsuit against
Nova; Nova wanted the court to throw out the plantation’s lawsuit entirely.
The court didn’t throw out the lawsuit…so Nova started to negotiate
a truce with Pushmataha.
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