Technology/Services

Retailers Demand More From Swipe-Fee Settlement

Merchants want changes to rules and business practices

SAN FRANCISCO -- Retailers and retail associations are not satisfied with the approximately $6.2 billion settlement from Visa Inc., Mastercard and U.S. financial institution defendants in the multidistrict litigation of credit-card interchange or swipe fees. Retailers such as convenience stores and associations including NACS are plaintiffs in the case.

While the agreement addresses monetary claims, it does not resolve merchants’ claims seeking changes to rules and business practices concerning merchant credit-card acceptance and payments. Many retailers and associations are rejecting the settlement without these changes.

NACS

“The broken swipe-fee system will not be fixed simply by Visa and Mastercard throwing some money to merchants,” said Lyle Beckwith, NACS' senior vice president of government relations. “These cases must bring real reform to make a difference. We are pleased to see that some of the merchants’ lawyers and representatives refused to sign onto this flawed settlement and are continuing to press for the changes that antitrust law calls for and merchants and their customers deserve.”

RILA

"Today's proposed settlement is just another symptom of our nation's broken payment ecosystem. It still offers merchants only pennies on the dollar for the harms that they suffered as a result of the anti-competitive rules backed by the card networks and big banks," said Deborah White, senior vice president and retail litigation center president for the Retail Industry Leaders Association (RILA). "More importantly, the proposal does not provide for any changes in those rules—and would limit the ability to pursue meaningful change of the rules that the payments card cartel will install to govern the payment ecosystem in the future."

NATSO

"NATSO is thoroughly reviewing the Payment Card Interchange Fee and Merchant Discount Antitrust Litigation document, but an initial review indicates that it does nothing to address the problems that merchants and their customers have with swipe fees," said Lisa Mullings, NATSO president and CEO. "This deal does not resolve merchants' concerns about the ability of credit-card companies to set inflated fees for all merchants accepting credit- and debit-card payments, nor does it deal with the card company rules that prevent any type of competitive market from taking shape."

NRF

“The monetary settlement doesn’t solve the problem. Swipe fees cost retailers and their customers tens of billions of dollars a year and have been skyrocketing for nearly two decades,” Stephanie Martz, senior vice president and general counsel for the National Retail Federation (NRF) said. “Ending the practices that lead to these anticompetitive fees is the only way to give merchants and consumers full relief once and for all.”

The claims were originally brought by a group of U.S. retailers in 2005. The suit reached a settlement once before, in 2012, only to be similarly rejected by merchants. The case eventually made its way to a federal appeals court in 2016. From there, the claims would have gone to the Supreme Court, but America’s highest court refused to take up the case in 2017.

But while retailers denounce the settlement, the defendants, including Visa, hope this marks the end of the case.

“After years of thoughtful negotiation, we are pleased to be able to reach this agreement and move forward in our partnership with merchants to provide consumers convenient, reliable, secure ways to pay,” said Kelly Mahon Tullier, executive vice president and general counsel for Visa. “This outcome benefits all parties and enables us to focus more of our resources and attention to building the future of digital commerce together.”

Many retailers, however, are not having it. "This settlement won't address the escalating fees collected by Wall Street and is a drop in the bucket when compared to the $90 billion that the payment networks currently collect every year in swipe fees. Visa and Mastercard will make this up by Christmas," said White.

The new settlement requires approval by a court to move forward, according to Reuters.

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