Proposed Settlement in Swipe Fee LitigationJuly 18, 2012
Last week, Visa, MasterCard and several of the nation’s largest banks signed on to a proposed settlement agreement in the case of In re: Payment Card Interchange Fee and Merchant Discount Antitrust Litigation, a class action lawsuit associated with litigation dating back to 2005 wherein the plaintiffs alleged that Visa and MasterCard conspired with banks such as CitiGroup, Bank of America, and Wells Fargo, among others, to fix interchange (or swipe) fees. Interchange (or swipe) fees are the fees charged by credit card companies and card-issuing banks every time a credit or debit card is used to pay for a good or service.
Even though the proposed settlement agreement has been agreed to by the credit card companies and banks, class representatives still have the option to opt-out and the judge still needs to approve the agreement. One of the class plaintiffs, who has refused to sign on to the proposed agreement, is the National Association of Convenience Stores (NACS). In doing so, NACS Chairman Tom Robinson stated:
“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… This proposed settlement allows the card companies to continue to dictate the price banks charge and the rules that constrain the market including fro emerging payment methods, particularly mobile payments. Consumers and merchants will ultimately pay more as a result of this agreement – without any relief in sight.”
Other class plaintiffs include the National Grocers Association, Rite-Aid Corporation, Publix Super Markets, Inc., and roughly 7 million other merchants (both large and small), If these merchants agree to the proposed terms, they would see their fair share of the overall settlement which is reported to be approximately $7.25 billion–possibly one of the largest antitrust litigation settlements in U.S. history. According to reports, the proposed settlement also includes a temporary reduction in interchange rates and an agreement to allow merchants to assess an additional charge on purchases to cover the fees, among other provisions.
Having long advocated for interchange “swipe” fee reform, NSBA believes that while the proposed settlement is a step in the right direction, it isn’t enough to curb industry practices that continue to place a significant and disproportionate burden on small business owners across the country.
Please click here for more on NSBA’s proposal to further reform swipe fees.