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Swipe Fee Settlement Not So Settled

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A $7 billion settlement in a federal antitrust lawsuit against Visa and MasterCard has been widely reported as the end of retailers’ fight over the issue of swipe fees. But some merchants are questioning the deal and telling NRF they might reject it.

“The money is significant, but money is only temporary,” says NRF general counsel Mallory Duncan. “What we need are changes in the rules that bring about transparency and competition that would be here for years to come.”

The agreement would require Visa, MasterCard and some of the major banks that issue cards to pay retailers $6 billion to settle claims that they had engaged in price-fixing. Fees would also be slightly lowered for eight months, a move estimated to be worth $1.2 billion.

The total, however, comes to only a fraction of the $100 billion NRF estimates retailers were overcharged over the past decade, and the settlement does virtually nothing to address future fees. Retailers had hoped to increase transparency by allowing swipe fees to be shown on receipts and to boost competition by blocking Visa and MasterCard from setting a fixed schedule of fees charged by all banks that issue their cards. Neither was done.

The settlement would allow merchants to impose a credit card surcharge — a right sought by retailers trying to negotiate lower fees. But that mechanism is unlikely to be helpful because it could require a retailer to impose a surcharge on nearly all credit cards, not just the higher-fee premium cards retailers seek to discourage. In addition, the settlement would bar retailers from future lawsuits over swipe fees.

Some retail companies have told NRF they are opposed to the proposed settlement and one plaintiff in the case, the National Association of Convenience Stores, has already rejected the offer. The settlement is subject to approval by a federal judge, who has yet to rule on the class action status of the suit and will have to consider objections from merchants.