Major Oppose Swipe Fee Settlement
Many analysts considered the $7.25 billion credit card interchange fee settlement to be a significant victory for retailers.
But the world’s two largest retailers, Walmart and Target, have both come out against the proposed settlement.
They join the National Association of Convenience Stores and the National Retail Federation, two organizations which immediately denounced the settlement when it was first announced on July 13. These organizations felt the settlement left credit card issuers with too much control over swipe fees.
As part of the landmark agreement–the largest antitrust class-action settlement in history–MasterCard, Visa and major banks agreed to pay more than $6 billion to resolve accusations that they engaged in anticompetitive practices and price fixing in payment processing. In addition, credit card companies agreed to reduce swipe fees for eight months, an adjustment valued at $1.2 billion.
The settlement would also allow retailers to charge higher prices to their customers for paying with credit cards. Before this settlement, the card companies prohibited retailers from adding this type of surcharge.
Today, Walmart, the world’s largest retailer, issued a statement saying: “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.”
Last Friday, Target released a statement which said: “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.”
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