Walmart, Target Oppose $7.2B Swipe Fee Settlement Offer
Walmart has joined Target in opposing an antitrust lawsuit settlement offer totaling $7.2 billion, which would be paid by Visa and MasterCard for allegedly conspiring to fix the swipe fees paid by retailers for credit card transactions. In addition to objections from the country's two largest retailers, industry associations representing the nation's convenience stores and supermarkets are also expressing unhappiness with the proposed interchange fee settlement.
The settlement, of a class action lawsuit representing seven million retailers that was initiated in 2005, includes an eight-month reduction in swipe fees valued at $1.2 billion, in addition to $6 billion that Visa, MasterCard and several large banks would pay back for past fee overcharges. Swipe fees can reach as high as 3% of a transaction's value. Under the agreement, retailers would now be able to pass along the additional cost of credit card transactions to consumers, although an attorney for the retailers says few stores would actually take this step.
Target was the first to voice objections to the settlement, which must be approved by a judge before going into effect. In a July 20 statement, the retailer said: "The proposed settlement would perpetuate a broken system, restrict retailers from any future legal action and offer no long-term relief for retailers or consumers."
On July 24, Walmart went even further, saying the settlement would not "prohibit credit card networks from continually increasing hidden swipe fees, which already cost consumers tens of billions of dollars each year," and would "also constrain emerging payments innovation." These innovations could include mobile wallets that allow consumers to pay using their smartphones.
In addition to dissatisfaction from the two retailing giants, a growing group of retail trade associations have expressed their opposition, beginning with the National Association of Convenience Stores (NACS) on July 16. On July 24, NACS was joined by SIGMA, an association representing independent motor fuel marketers and chain retailers, and the National Grocers Association jumped on the anti-settlement bandwagon on July 27.
"NGA joined the lawsuit on behalf of its independent retail grocer members over seven years ago to bring about real reform of the anticompetitive credit card swipe fee system," said NGA president and CEO Peter Larkin in a statement. "This proposed settlement agreement fails in this regard by allowing Visa and MasterCard to continue their dominant anticompetitive practices."
For related content: Retailers Win Major $6B Victory Against Visa, MasterCard Swipe Fees
The settlement, of a class action lawsuit representing seven million retailers that was initiated in 2005, includes an eight-month reduction in swipe fees valued at $1.2 billion, in addition to $6 billion that Visa, MasterCard and several large banks would pay back for past fee overcharges. Swipe fees can reach as high as 3% of a transaction's value. Under the agreement, retailers would now be able to pass along the additional cost of credit card transactions to consumers, although an attorney for the retailers says few stores would actually take this step.
Target was the first to voice objections to the settlement, which must be approved by a judge before going into effect. In a July 20 statement, the retailer said: "The proposed settlement would perpetuate a broken system, restrict retailers from any future legal action and offer no long-term relief for retailers or consumers."
On July 24, Walmart went even further, saying the settlement would not "prohibit credit card networks from continually increasing hidden swipe fees, which already cost consumers tens of billions of dollars each year," and would "also constrain emerging payments innovation." These innovations could include mobile wallets that allow consumers to pay using their smartphones.
In addition to dissatisfaction from the two retailing giants, a growing group of retail trade associations have expressed their opposition, beginning with the National Association of Convenience Stores (NACS) on July 16. On July 24, NACS was joined by SIGMA, an association representing independent motor fuel marketers and chain retailers, and the National Grocers Association jumped on the anti-settlement bandwagon on July 27.
"NGA joined the lawsuit on behalf of its independent retail grocer members over seven years ago to bring about real reform of the anticompetitive credit card swipe fee system," said NGA president and CEO Peter Larkin in a statement. "This proposed settlement agreement fails in this regard by allowing Visa and MasterCard to continue their dominant anticompetitive practices."
For related content: Retailers Win Major $6B Victory Against Visa, MasterCard Swipe Fees