SALT LAKE CITY -- High credit-card and debit-card interchange fees and the restrictive rules governing payment-card issuing and merchant acceptance are at the heart of a new lawsuit filed by more than 100 convenience stores, travel centers, gas stations, pizza shops and other retail companies against Visa and MasterCard.
Alleging a “swipe” fee price-fixing conspiracy that also prevents merchants from offering discounts and surcharges, the retailers, led by Casey’s General Stores Inc., filed the lawsuit in U.S. District Court in Salt Lake City on March 30.
“The unreasonable restraints of trade imposed by Visa and MasterCard have caused substantial competitive injury to [the] plaintiffs, causing [the] plaintiffs to pay higher-than-competitive fees for the privilege of accepting debit and credit cards. Elimination or modification of the competitive restraints and restoration of competitive markets for merchant acceptance would substantially reduce interchange fees, allowing [the] plaintiffs to operate more efficiently and at lower costs, to the benefit of consumers,” the retailers said in court documents.
Visa and MasterCard have limited or eliminated competition among member banks by adopting “default” interchange fees, the honor-all-cards rule, the all outlets rule, the no discount rule and the no surcharge rule, the retailers allege.
Details of these allegations include:
- The default interchange fees constitute price fixing among competitors.
- The honor-all-cards rule requires that a merchant that accepts any Visa or MasterCard credit card must accept all such credit cards, no matter which bank issued the card, regardless of the terms, including interchange fees, associated with acceptance of the card.
- The all outlets rule requires merchants that accept Visa or MasterCard payment cards at any location to accept those cards at all of their locations.
- The no discount rule allows discounts to customers who pay with cash and, following settlement of a challenge by the U.S. Department of Justice in 2011, also allows merchants to offer other discounts in limited circumstances.
- The no surcharge rule prohibits merchants from imposing a surcharge on consumers for the use of Visa or MasterCard payment cards. This prevents merchants from creating incentives for consumers to use cards that have more attractive terms to the merchant.
As reported in a McLane/CSP Daily News Flash, the retailers allege that these practices and restrictions amount to “a conspiracy in restraint of trade” with member banks issuing credit cards and debit cards by charging merchants “inflated” interchange fees “higher than would exist in a competitive market.”
Casey’s, for example, alleges in the amended complaint that it “has been forced to pay [the] defendants’ supra-competitive interchange fees and to abide by [the] defendants’ competitive restraints. [It] therefore has been injured in its business and/or properties as a result of the unlawful conduct.”
The other companies make similar allegations. Ankeny, Iowa-based Casey’s declined to comment on the lawsuit.
Other convenience-store companies listed as plaintiffs in the lawsuit include Dash In Food Stores, Delta Sonic, Flyers Energy, Gate Petroleum, Plaid Pantries, Robinson Oil, Stinker Stores, Tri Star Marketing, Cary Oil, Best Petroleum, GT Petroleum, Pester Marketing, Hi-Noon Petroleum, Great Lakes Convenience, Triple S Oil/Mr. Gas, Champlain Oil, Coco Mart/Jiffy Mart, J.D. Streett & Co., Kath Fuel Oil Service, Slidell Oil, Space Age Fuel, Mission Trail Oil, Reid Stores, Jaco Oil, Fastrip Oil, Herdrich Petroleum, Popingo’s Convenience Stores, HJB Convenience, Jag Convenience, Potomac Energy Holdings, Speedee Mart, Redding Oil, Valley Petroleum, By-Lo Oil, Speedy Q Markets, Lawrence Oil, Downs Energy and Wallis Oil, among others.
The plaintiffs are demanding a jury trial and are seeking compensatory damages, treble damages, interest and attorney’s fees from Foster City, Calif.-based Visa and San Francisco-based MasterCard.
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