The next chapter in the eight-year battle between the retail industry and Visa and MasterCard is set to unfold as the National Retail Federation (NRF) recently filed an appeal to the controversial antitrust lawsuit settlement covering credit card swipe fees. At the heart of the appeal is the fact that the deal simply won’t prevent these fees from continuing to rise at exponential rates in the future.
In December, a federal judge approved the proposed $5.7 billion settlement between retailers and the credit card giants. Merchants had brought the suit against Visa and MasterCard to fight the soaring cost of swipe fees, which drains $50 billion a year from the bottom line of retailers and consumers. Given that the major credit card companies together control 80 percent of the market, they continue to set these fees in a manner that amounts to price-fixing. Merchants, at no point, have ever been given an opportunity to negotiate these fees.
So, what is gained by the settlement? From the merchants perspective, not very much. Even with this settlement in place, the problems retailers face, which triggered the litigation to begin with, will remain. The decision offers nothing in terms of reforming the system or curbing the escalating costs of the fees, which have tripled in the past decade alone. In fact, the $5.7 billion settlement is a mere drop in the proverbial bucket for Visa and MasterCard as it represents less than three months of their swipe fee profits.
As Mallory Duncan, NRF’s Senior Vice President and General Counsel says,
“The only people pleased with this settlement are Visa and MasterCard, because it means they can continue collecting tens of billions of dollars in hidden fees, the class action lawyers who stand to collect half a billion dollars in fees without fixing the problem, and a lower court, which has cleared a time-consuming case off its docket, but has done a serious disservice to merchants and the public in the process.”
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