The settlement of a recent antitrust case will find Visa, MasterCard and many other major banks responsible for over $7 billion in an antitrust case settlement charged on the behalf of more than 7 million retailers.
The proposal for this settlement also promises to lower swipe fees for businesses for at least eight months. This will, in turn, reduce the amount of money that consumers may have to pay in fees passed onto them during point of sale transactions for their Visa or MasterCard; but only if businesses choose to pass on this preliminary savings to their customers.
This new deal will allow stores to charge more for credit card transactions according to recent changes that Visa and MasterCard have made to their rules (as per the settlement). Generally, these transactions cost merchants more since credit card processing is not protected by fee caps, which means that merchants can charge more to compensate, should they choose to.
Despite the financial reform of 2010 that allowed this provision, though, it seems that many retailers are refraining from the auxiliary charge. As a matter of fact, many retailer attorneys report that very few, if any at all, will charge more for credit card purchases in the United States.
Observing the fact that retailers in other countries rarely every attach extra surcharges on credit card purchases (regardless of whether or not they are allowed or encouraged), it seems only smart for U.S. retailers to do the same. According to Craig Wildfang, co-lead counselor for the plaintiffs, most of these credit card companies (overseas) agree to reduce what they charge instead of pass the excess onto their customers.
As a matter of curious fact, though, retailers do not exactly know what they are being charged for in regards to their credit transactions anyway. It is quite a peculiar matter; as fees vary between companies. Of course, this makes it extremely difficult for retailers to know, at any given time, so they have no standardized method for regulating these charges.
This is according to National Retail Federation general counselor Mallory Duncan who also says that this measure is really just a stopgap that “does very little to actually fix the problem.” The banks are slated to pay around $6 billion for their past fee charges and then lower them over the course of the next 8 months and that is “a one-time bump back to the bad old world” of excessive fee-charging. She continues, saying,
There’s a growing number of disgruntled retailers of all sizes.
Apparently, Noah Hanft, general counselor for MasterCard agrees. He said, Friday, “Although we have strong defenses to all claims, a settlement avoids years of litigation and uncertainties that are inherent in such cases.”
While it seems that the litigants have reached an agreement that credit card companies will pay the at-least-$6 billion penalty, it is still very unclear as to who, exactly, will benefit from it. Truly, it would appear, consumers should somehow receive some kind of kickback but that is currently under debate. Of course, credit card financiers are up in arms about this as they have already had to settle for charging less for debit card transactions and will want to dispute this settlement as thoroughly as possible.
Furthermore, however, retailers contest that the fees they continue to pay even after the settling of this antitrust case is still too high. In opposition to this, though, the same retailers also report that they are passing the difference in savings onto their customers.
To be more specific, this settlement (which began debate in 2005) will place a fixed fee on credit and debit card transactions, which average out to roughly 2% of every purchase which, Wildfang reports, will reflect in a savings for the consumer.
Similar Credit Card News:
- [October 1, 2012] Bank of America Settles Merrill Lynch Suit
- [July 12, 2011] Visa Launches New Security Sense Website
- [November 4, 2011] U.S. Economy Sees 2.5% Growth Last Quarter
- [October 7, 2011] Google Announce Expansion Of Google Wallet
- [October 29, 2010] Retailers Offering More Customer Rewards
- [February 21, 2013] Credit Card Cramming
- [March 21, 2011] MC Waives Fees on Japanese Relief Donations