Previous News:
October 2021
September 2021
August 2021
July 2021
June 2021
May 2021
April 2021
March 2021
February 2021
January 2021
December 2020
November 2020
October 2020
September 2020
August 2020
July 2020
June 2020
May 2020
April 2020
March 2020
February 2020
January 2020
December 2019
November 2019
October 2019
September 2019
August 2019
July 2019
June 2019
May 2019
April 2019
March 2019
February 2019
January 2019
December 2018
November 2018
October 2018
September 2018
August 2018
July 2018
June 2018
May 2018
April 2018
March 2018
February 2018
January 2018
December 2017
November 2017
October 2017
September 2017
August 2017
July 2017
June 2017
May 2017
April 2017
March 2017
February 2017
January 2017
December 2016
November 2016
October 2016
May 2016
April 2016
December 2015
March 2015
January 2015
September 2014
August 2014
July 2014
May 2014
April 2014
March 2014
February 2014
January 2014
December 2013
November 2013
October 2013
September 2013
August 2013
July 2013
June 2013
May 2013
January 2013
June 2012
May 2012
April 2012
March 2012
February 2012
January 2012
December 2011
November 2011
October 2011
September 2011

New Settlement Proposal Fails to Bring Billions in Credit Card Swipe Fees Under Control

Fees Cost Consumers Nearly as Much as Christmas Presents or School Supplies

The National Retail Federation today said a proposed new class action settlement, which purports to resolve claims Visa and MasterCard set credit card swipe fees in a multi-billion dollar price-fixing scheme, largely resembles part of an agreement that both a federal appellate court and the retail industry had already rejected.

“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,” NRF Senior Vice President and General Counsel Stephanie Martz 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 deal that was unveiled today, and which awaits court approval after it is filed in the Eastern District of New York, proposes a way to settle the monetary damages part of the massive lawsuit. The proverbial jury is still out on the part of the lawsuit that would change some of the anticompetitive rules of the card networks, which NRF considers to be integral to helping merchants going forward.

“Swipe fees are not just a business-to-business issue,” Martz said. “By driving up prices, they cost consumers hundreds of dollars a year – nearly as much as the average family spends on Christmas gifts or back-to-school supplies.”

The proposed settlement comes in a lawsuit against Visa, MasterCard and their largest card-issuing banks that was filed by a group of small retailers in 2005 without involvement by NRF or most major retailers.

One important improvement: Merchants who accept the new settlement would face a ban on suits against the networks for five years rather than the broad, permanent ban on future swipe fee lawsuits mandated in the earlier settlement. The settlement is for a proposed $6.2 billion.

NRF will closely watch the next phase of settlement discussions, which merchants hope will make significant changes in the way Visa and MasterCard set the complex matrix of swipe fees banks charge merchants to process credit card transactions. Virtually all banks that issue the two brands of cards follow those fee schedules uniformly rather than competing, a practice retailers have long said is a price-fixing arrangement that violates federal antitrust law. Without transparency or competition, the fees could continue to increase.

The fees average about 2 percent of each credit card transaction, and the system has allowed them to grow dramatically. Swipe fees for Visa and MasterCard credit cards alone totaled $43.4 billion in 2017, up from $25.9 billion in 2012, according to the Nilson Report, a newsletter that follows the card industry. For the card industry overall, the fees are about $80 billion a year. Card industry rules and practices have effectively forced retailers to include the fees in the price of merchandise, driving up costs for the average cardholder by hundreds of dollars a year.

The failure to reform the price-fixing system, the permanent ban on future lawsuits and the inability to fully opt out were among the reasons NRF and a broad cross section of the retail industry ranging from independent Main Street stores to national chains rejected the 2013 settlement. And the $7.25 billion that was previously rejected amounted to only a few hundred dollars each for many small retailers harmed by the price fixing.

Given those concerns, NRF asked the 2nd U.S. Circuit Court of Appeals to overturn the settlement in 2014. The appeals court ruled in NRF’s favor in 2016, saying merchants were inadequately represented in the case. That ruling was appealed to the Supreme Court, but the high court refused to take up the case last year, sending it back to trial court for further attempts to reach a resolution.

About The National Retail Federation
The NRF is the world’s largest retail trade association, representing discount and department stores, home goods and specialty stores, Main Street merchants, grocers, wholesalers, chain restaurants and Internet retailers from the United States and more than 45 countries. Retail is the nation’s largest private-sector employer, supporting one in four U.S. jobs – 42 million working Americans. Contributing $2.6 trillion to annual GDP, retail is a daily barometer for the nation’s economy.

AT: 09/19/2018 03:22:48 PM   LINK TO THIS NEWSLETTER

Post a Comment
Comments are closed.
Copyright © 2009 - 2023 TRJ Publishing LLC.

Sitemap | Privacy Policy