BENTONVILLE, Ark. -- Mass merchants Walmart and Target have followed convenience store/gas station industry groups NACS and SIGMA in opposing the multi-billion settlement with Visa Inc. and MasterCard Inc., which would end more than many lawsuits filed since 2005 against the payment networks and numerous large banks over the interchange or "swipe" fees merchants pay to accept credit cards.
The settlement is being seen by some as a victory for retailers, which will get more control over how people pay, and removes a legal threat for the major card companies. It could potentially raise prices for some goods and services for consumers who prefer using cards to cash and checks. It does not apply to debit cards (see Related Content below for details of the settlement, as well as previous CSP Daily Newscoverage.)
Bentonville, Ark.-based Wal-Mart Stores Inc. issued the following statement:
"Walmart, along with a growing number of consumer groups and merchants, is disappointed in the proposed credit card interchange fee settlement. The proposed settlement would not structurally change the broken market or prohibit credit-card networks from continually increasing hidden swipe fees, which already cost consumers tens of billions of dollars each year. The proposed settlement would require merchants to broadly waive their rights to take action against the credit card networks for detrimental conduct or acts. We believe the proposed settlement would also constrain emerging payments innovation. As Walmart continues to seek reform that will provide transparency and true competition among financial institutions, we encourage all merchants to put consumers first and reject the settlement."
Minneapolis-based Target Corp. also issued a statement:
"Target believes the proposed interchange fee settlement is bad for both retailers and consumers. 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. In addition, Target has no interest in surcharging guests who use credit and debit cards in order to allow Visa and MasterCard to continue charging unfair fees. We will continue to explore our options while working toward a solution that represents true reform."
As previously reported in CSP Daily News, because the proposed settlement does not introduce competition and transparency into the broken credit-card swipe fee market, the National Association of Convenience Stores board, comprised of more than two-dozen merchants, unanimously rejected the proposed settlement agreement.
"Not only does the proposed settlement fail to introduce competition and transparency into a clearly broken market, it actually provides Visa and MasterCard with the tools to continue to shield swipe fees from market forces," said NACS chairman Tom Robinson, president of Santa Clara, Calif.-based Robinson Oil Corp. "This proposed settlement allows the card companies to continue to dictate the prices banks charge and the rules that constrain the market including for emerging payment methods, particularly mobile payments. Consumers and merchants ultimately will pay more as a result of this agreement--without any relief in sight."
And although it is not a party to the lawsuit, the Society of Independent Gasoline Marketers of America said in a statement:
"SIGMA does not support the proposed settlement of longstanding antitrust litigation between merchants and the credit card industry. Although SIGMA has never been a party to the litigation, the potential settlement would impact and bind all retailers that accept Visa and MasterCard cards. Because the proposed settlement does not introduce competition and transparency into the broken credit card swipe fee market, SIGMA does not support adoption of the settlement agreement.
"The proposed settlement agreement would allow Visa and MasterCard to continue setting interchange fees for their respective member banks. Additionally, the card companies would be allowed to continue dictating the rules that constrain the payments market, even as we move toward mobile payments and other emerging payment methods.
"Although the proposed settlement is the largest antitrust settlement in U.S. history, it amounts to less than two months' worth of swipe fees paid by merchants. The merchant community pays an estimated $50 billion in swipe fees each year. The proposed settlement does not contain any fundamental market reforms that would keep the card networks from continuing to raise these fees, and it would require merchants to give up future challenges regarding the anticompetitive practices of the networks with respect to interchange fees.
"The practices of the credit card industry are anticompetitive. The proposed settlement shields the card networks and banks from market forces and from future litigation challenging their conduct. By the time merchants receive any funds from the settlement agreement, interchange fees will have increased and merchants will still be forced to accept anticompetitive, take-it-or-leave-it rules set by the card networks regarding card acceptance.
"The proposed settlement does allow merchants to show consumers some of the costs of accepting credit cards, but only under very limited circumstances with strict oversight by Visa and MasterCard. That oversight makes the settlement unworkable for virtually all merchants.
"Merchants have been fighting for years for competition and transparency in the interchange market. The proposed settlement does not come close to achieving our objectives. Visa and MasterCard will continue to separately fix interchange fees for their member banks; banks still will not have to compete and set their own prices like every other business in the U.S. economy. SIGMA does not support any settlement that fails to make meaningful, fundamental changes to the broken swipe fee market. Merchants and consumers need real competition and transparency, for which we will continue to fight."
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