Retailer Groups React to Visa & Mastercard Settlement

NACS and other associations deem settlement terms as insufficient for true relief.
Angela Hanson
Credit card fees

NATIONAL REPORT — NACS and other retail industry groups are pushing back against an estimated $30 billion settlement reached by Visa and Mastercard to limit credit and debit card fees for merchants, stating that the antitrust deal does not go far enough.

Under the settlement, the credit card companies would reduce swipe fees by at least four basis points for three years, and ensure an average rate that is seven basis points below the current average for five years, according to a Reuters report. Additionally, merchants will have greater discretion in offering discounts or imposing surcharges on cards with higher interchange fees.

[Read more: Visa & Mastercard Swipe Fees Hit $100B in 2023]

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Visa touted multiyear benefits for businesses, such as lower interchange rates, a cap on the reduced credit interchange rates for five years and new ways to manage costs. However, NACS announced its opposition for multiple reasons, claiming that the deal could prevent real change from happening in the marketplace.

The settlement is consolidated by a larger lawsuit by NACS and other groups that was first filed in 2005. A previously announced settlement in 2012 was rejected by NACS and a majority of plaintiffs because it fell short of addressing problems with credit card industry price-fixing, the association said.

The same is true of the newly announced settlement, according to NACS, which noted that the settlement is drafted as "mandatory" and would bind all other litigants, including a separate suit being pursued by the association and some of its members, cutting off any future injunctive relief/rules claims.

Additionally, the settlement does not address the lack of competition in the marketplace and is not related to the bipartisan Credit Card Competition Act, which would assert that retailers in certain cases have the right to route payments through networks unaffiliated by the credit card providers, potentially lowering the fees they have to pay.

"Unfortunately, this settlement does not look much better than the one we successfully fought in 2012," said NACS General Counsel Doug Kantor. "There are some additional provisions, but our initial review shows them to be limited in time and efficacy. We expect most merchant groups will see this the same way and that there will be major efforts to urge the court to reject the settlement.

"This settlement shows once again how urgent it is for Congress to act. We need real reforms that bring market competition to credit card swipe fees so that Main Street gets real, long-term relief," Kantor added.

A person swiping a debit card at retail


The Merchants Payments Coalition (MPC) said the settlement would provide "very small relief" and does not end the need for Congress to pass legislation.

"This settlement is a bad deal for merchants," said MPC Executive Committee member and National Grocers Association Senior Vice President of Government Relations and Counsel Christopher Jones. "A few years of very small relief followed by business as usual is not a good outcome from 20 years of litigation. The settlement does nothing to actually bring competitive market forces to swipe fees or change the behavior of a cartel that centrally fixes rates and bars competition. Instead, it tries to provide token, temporary relief and then allows the card companies to raise rates yet again. Congress needs to act so that we will have real reform that will benefit merchants and their customers."

[Read more: New Coalition Forms to Push for Swipe Fee Reform]

He added that the proposed swipe fee reductions fall within the range that Visa and Mastercard have raised swipe fees to in recent year, and "fall far short" of the needed relief.

The Retail Industry Leaders Association (RILA) released a statement calling the settlement "an acknowledgment that the credit card payment market has been broken, and for decades, Visa and Mastercard have used their duopoly to fleece retailers of all sizes by their abusive interchange fees and card network rules."

However, it also deemed the settlement "a mere drop in the bucket" compared to what is needed.

"It proves that merchants deserve injunctive relief, but whether the settlement terms proposed are sufficient to remedy the harm caused by the current interchange system needs to be carefully reviewed," RILA said. "Leading retailers intend to study the terms of the settlement closely and reserve the right to object to the settlement deal if it comes up short on what merchants deserve."

The association joined others in encouraging Congress to pass the Credit Card Competition Act to ensure true competition in the market.

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