Wal-Mart has recently joined in the protest against the proposed Visa and MasterCard credit card fee settlement.
They are the newest voice speaking out against the broken system, claiming that these changes will not affect retailers, only customers.
On Tuesday, the world’s largest retailer, Wal-Mart, became the newest merchant to take on credit card companies with their dissention of the proposed $7.25 billion settlement over swipe fees. They are in good company in a fight that could very well change the face of card payments in the United States over the next few years. Of course, with alternative digital payment processing options on the rise, perhaps this is a good thing. Either way, though, the company said in a press statement:
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.
This remark comes at a crucial time in the fight over swipe fees as the class-action settlement between retailers and Visa and MasterCard is awaiting approval from the courts. The approval process, then, will take as long as is necessary while the court attempts to resolve Wal-Mart’s claim that Visa and MasterCard have both conspired with major banks to institute and maximize these swipe fees. Obviously, this is quite a sensitive issue that will require careful consideration.
Included in the $7.25 billion settlement is the $6 billion that Visa, MasterCard, and approximately a dozen of the largest banks in the United States are supposed to pay to a certain number of stores who were charged these fees. At the very least, though, the card companies have agreed to lower swipe fees for at least eight months, which is what, basically, accounts for the other $1.25 billion. Furthermore, the settlement will also allow stores to charge something they are calling “check-out fees” to customers who use a Visa or MasterCard. These fees will apply to both credit cards and debit cards.
Many consumers are probably confused over the specifics of this case but all you really need to know is that credit card companies charge retailers every time you swipe your card. Many retailers then pass that charge onto you; some will absorb the charge.
You might be more familiar with this charge if you use debit cards, especially if you make small purchases at convenient stores or gas stations. The settlement, then, is in response to consumer frustration with having to pay the fee and retailers, of course, not wanting to absorb it. Wal-Mart is just one of the many companies including Target Crop, a rival of Wal-Mart, as well as the entire National Association of Convenience Stores to speak out against the settlement.
Wal-Mart has said that the settlement may restrict payment processing innovation while also forcing retailers to waive their rights to assemble and take action against the conglomerate credit card networks in a more general way. This is important because the settlement is supposed to address certain “detrimental conduct or acts” that have been employed by the credit card networks over the past decade or so.
Unfortunately, though, the damage is done and now retailers and consumers alike have not to do but wait for approval. The proposal is passing through the hands of U.S. District Court Judge John Gleeson over the next few months in a federal court in Brooklyn, New York.
To be a little more precise, the settlement is In re Payment Interchange Fee and Merchant Discount Antitrust Litigation in the U.S. District Court for the Eastern District area of New York, #05-1720.