How a Small Business Took On Visa and Mastercard

Estimated reading time: 10 minutes

How a Photo Scanning Company Took On Visa and Mastercard

[Op-ed by Mitch Goldstone, CEO, ScanMyPhotos] 

It started with a letter that almost went into the trash.

In late February 2005, a plain-looking notice arrived at 30 Minute Photos Etc., the Irvine, California photo business Carl Berman and I were running at the time, which would later become ScanMyPhotos.com. Carl nearly threw it away. Then he read the fine print. Beginning April 1, merchants like us would pay higher interchange fees when customers used Visa and Mastercard payment cards issued by major banks.

That caught our attention because, like millions of merchants, we had always treated credit card fees as an unavoidable cost of doing business. Customers wanted to pay by card. We accepted cards. Fees came out of the transaction. You complained, paid the bill, and moved on. But this notice made us stop. Some premium cards offered consumers more perks, while merchants accepting those cards could face higher costs. We didn’t choose which card a customer pulled from their wallet, yet the cost of accepting one card could differ from another.

We were initially uncertain as to the reasoning behind the system’s operation; consequently, I reached out to The Wall Street Journal. I realized this exemplified the definition of collusion and anti-competitive price fixing.

I wasn’t trying to start a movement. I wasn’t thinking about antitrust law, Congress, or a multibillion-dollar settlement. I thought a business reporter might understand the economics better than I did and might be willing to ask the same basic question we were asking: why?

On April 12, 2005, The Wall Street Journal published “Merchants Balk At Higher Fees For Credit Cards,” by Gwendolyn Bounds and Robin Sidel. The article opened with that letter arriving at 30 Minute Photos Etc. and Carl nearly throwing it away. It explained the frustration merchants were beginning to feel about interchange fees and the higher costs associated with certain premium cards.

That article became a turning point, not because one story transformed the payment card industry, but because it took something buried in merchant statements and put it into public view. A complicated, mostly invisible cost suddenly had a national audience. Soon after the article appeared, attorney K. Craig Wildfang at Robins Kaplan LLP contacted me. We discussed the story, the broader concerns facing merchants and possible responses. A little more than two months later, on June 22, 2005, ScanMyPhotos signed on as the lead plaintiff in an antitrust action against Visa, Mastercard, and major banks over interchange fees and payment card rules. [MDL No. 1720 in the U.S. District Court for the Eastern District of New York].

The merchants alleged that aspects of the system restrained competition and caused businesses to pay excessive fees. Visa, Mastercard, and the other defendants denied the allegations and maintained that their practices were lawful and competitive. That distinction is important. The litigation eventually settled. It did not end with a trial verdict finding the defendants liable.

The case became part of In re Payment Card Interchange Fee and Merchant Discount Antitrust Litigation, a massive federal proceeding in Brooklyn.

Then something happened remarkably quickly. When we filed our lawsuit in June 2005, Visa and Mastercard were very different from the public companies we know today. The Justice Department had previously said the “same set of banks” governed both competing networks, an arrangement it called “duality,” and argued that this weakened competition between them. Just 10 weeks after our lawsuit was filed, Mastercard announced plans to overhaul its ownership and governance, bring in public investors and create a board with a majority of independent directors. Mastercard later said the new structure would address “perceived conflicts of interest,” and completed its IPO in 2006. Visa later restructured with a majority independent board and went public in 2008. To me, the timing was striking. But it is important to separate my interpretation from the legal record: these changes did not prove our allegations, and our case ultimately settled without a trial verdict finding the defendants liable.

For us, the contrast was almost absurd. We were running a photo business in Southern California. On the other side were some of the world’s largest banks and payment card companies. We didn’t have floors of lawyers. We didn’t have a lobbying department. We had employees, rent, equipment, customers, and a business to operate.

That imbalance matters because challenging a powerful institution looks very different from inside a small business than it does years later, once the history has been written. There is uncertainty. There is reputational risk. You may invest enormous time in something that goes nowhere. Meanwhile, payroll is still due. Customers are still waiting. Equipment still breaks. The ordinary pressures of running a company don’t disappear because you decided to question a large industry.

There was another complication. We depended on the very payment system we were questioning. Our customers used Visa and Mastercard every day. These were not distant companies whose products had nothing to do with us. They were part of how our business got paid. That made the size difference impossible to ignore.

As the litigation continued, I began talking to other merchants, reporters, and policymakers about interchange fees. I also traveled to New York and Washington multiple times, meeting with many, including congressional staff. One of the objects I carried with me was an old manual credit card imprinter, the kind where a merchant placed a card under carbon paper and slid a heavy handle across it.

Anyone who remembers those machines can probably still hear the sound.

Chunk.

That machine made a simple point. Payment technology had changed dramatically. Transactions had become electronic and increasingly automated. If the technology had changed so much, it seemed reasonable to ask whether the economics surrounding those transactions deserved scrutiny too. Years later, the federal court record specifically described my meetings and efforts to educate merchants about interchange fees and the old credit card imprinter I carried around Washington. The court said my involvement went beyond what was normally expected of a class representative and described me as becoming “somewhat of a class spokesperson.”

I mention that not to make this story about me, but because independent records matter when recounting something that lasted more than two decades. Memory changes. Court documents don’t depend on memory.

The issue also began receiving much broader media attention. The New York Times, The Washington Post, the Los Angeles Times, The Wall Street Journal, the Associated Press and the Orange County Register covered aspects of the interchange battle. PBS FRONTLINE examined the issue as part of its reporting on the credit card industry. The federal record later preserved a substantial chronology of that reporting and advocacy.

What started as a line on merchant statements became a national discussion about competition, payment costs, and the balance of power between merchants and financial institutions.

By 2012, the litigation had been underway for seven years. Visa, Mastercard, and major banks agreed to a proposed settlement initially valued at approximately $7.25 billion. Reporters returned to the story. The Washington Post identified me as one of the merchant plaintiffs. The Los Angeles Times profiled the dispute and the unlikely role of an Irvine photo business. During that coverage, I described it as my “Erin Brockovich moment.” I wasn’t comparing the stakes. Erin Brockovich’s story involved contaminated groundwater and families facing serious health consequences. The comparison was about something more basic: one person notices something that doesn’t seem right, the organizations on the other side are much larger, and there are plenty of reasons to walk away.

Then came the part that doesn’t fit neatly into a movie ending.

The 2012 settlement did not simply become final and disappear into history. It faced legal challenges. Parts of it were overturned. The litigation continued for years.

Eventually the parties reached a superseding monetary settlement in 2018. The district court granted final approval in 2019. The settlement is commonly described as approximately $5.54 billion. The settlement history itself traces the litigation back to June 22, 2005, when Photos Etc. Corporation and other merchants filed the original action.

By then, 30 Minute Photos Etc. had evolved into ScanMyPhotos.com as our company moved away from traditional retail film processing and focused on digitizing photographs. The business changed dramatically. The litigation kept going.

Then, nearly two decades after the lawsuit began, the Associated Press returned to the story in 2024. This time, the issue wasn’t whether the case would settle. It was whether eligible merchants would actually file claims and receive whatever amount they were entitled to under the settlement process. I found myself talking about interchange again, this time because I was frustrated that businesses might miss out simply because they hadn’t heard about the claims process or found it confusing.

That episode taught me another lesson about advocacy. Getting an issue into court or into the news isn’t necessarily the end. A settlement on paper doesn’t automatically become a benefit in someone’s bank account. Administration, paperwork, deadlines, and communication follow. More than two decades after the original complaint, settlement administration was still continuing. What interests me most now is not the size of the settlement. It is how ordinary the beginning was.

No strategic session focused on engaging the payment card industry. We established no comprehensive plan to position ourselves as advocates. Instead, only a letter was received. Carl nearly disposed of it without consideration. Upon review, we examined the details carefully. The reasoning behind the fee structure remained unclear. Subsequently, I contacted a journalist. The Wall Street Journal deemed the topic worth investigating. A legal professional reviewed the article and reached out to me. These inquiries developed into discussions. These discussions ultimately led to decisive actions.

That sequence changed the way I think about the power of journalism. Reporters can take something buried in technical language and bring it into the light. They can connect one person’s experience to a broader pattern. They can create the first public record of an issue that might otherwise remain invisible. But journalism alone doesn’t solve the problem. After the story comes the work. You have to read. You have to listen. You have to find people who understand the issue better than you do. You have to be willing to learn that your original assumption was wrong. If the facts continue pointing toward a genuine problem, you have to decide whether you are willing to put your name behind it.

And you have to understand the risk. Small businesses do not have unlimited legal budgets. They do not have unlimited time. They do not have the resources of major financial institutions. When they publicly challenge much larger companies, there is no guarantee of protection from criticism, distraction, or failure. That is exactly why size can become such an effective deterrent.

People often assume that if a problem matters enough, somebody more powerful must already be handling it. An industry organization will take care of it. A giant corporation will complain. Government will step in. A regulator will notice. Someone with more money, influence, or expertise will fix it.

Sometimes they do. Sometimes everybody is waiting for everybody else.

That doesn’t mean every disagreement deserves a lawsuit. It doesn’t mean every small business owner who feels mistreated is right. It means that the size of the institution on the other side should not determine whether a legitimate question gets asked. Twenty-one years ago, our story began because a plain-looking letter didn’t end up in the trash. We read the fine print and asked why.

What followed involved journalists, lawyers, courts, Congress, regulators, merchants, and financial institutions on a scale we never could have imagined when that letter arrived. No one merchant changed the entire system — it was many merchants. But somebody had to notice the problem before anyone could investigate it. Change begins when someone asks the question others won’t, and refuses to let being small become a reason to stay silent.

Courage isn’t believing you are more powerful than the institution you challenge. It is understanding that you are not, doing your homework anyway, accepting the risk, and deciding that a legitimate question still deserves an answer.

Sometimes change starts with something far less dramatic than courage looks in hindsight. Sometimes it starts because someone reads the fine print and decides not to throw the letter away.

[Revised on August 15, 2026].

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