Over the summer, Visa and MasterCard reached a settlement with key players in the retail industry that would amount to $7.2 billion in cash payments and temporarily reduced swipe fees. This week, the National Retail Federation announced its intent to overturn the settlement, stating that it did not go far enough to curtail Visa or MasterCard's anti-competitive practices.
The group said that the settlement would not help retailers. Instead, the settlement allows Visa and MasterCard to continue to increase swipe fees that merchants pay to process credit cards. The settlement would also detour any future legal challenges. If the settlement is approved, retailers lose the right to sue credit card companies in the future for oversized swipe fees.
The fight over swipe fees is nothing new. In fact, the settlement reached in July was to settle a lawsuit that began seven years earlier. The lawsuit claimed Visa and MasterCard colluded with banking institutions to artificially drive higher the cost of processing payments.
Among the biggest changes in the settlement, the retailing industry would have the right to charge customers extra for using their credit cards. This could mean that retailers which might charge $20 for a product charge $20.40 for credit card payers. Cash payers could get the normal advertised price.
Other groups have rallied their memberships to oppose the settlement. Walmart and Target have both agreed that the settlement is unworkable. The National Association of Convenience Stores released its own announcement vehemently opposing any settlement that restricted future swipe fee complaints on behalf of the retail industry.
Most concerning for the retail industry is that the settlement allows companies to opt out of the settlement, but not a requirement that would dissuade future lawsuits against payment processors. This lawsuit is far from over; the National Retail Federation will go before a judge to start a new case later this year.