NRA Rejects $7.2 Billion Settlement Over Visa and Master Card Transaction

visa

In July 2012, an antitrust settlement was brought forth as the proposed resolution to a seven-year lawsuit that brought charges against Visa and MasterCard for allegedly conspiring with large banking chains to inflate the fees charged for every credit card swipe transaction. The deal would pay $6 billion to businesses affected by the lawsuit, and would reduce transaction fees for a period of eight months allowing businesses to save an additional $1.2 billion in processing fees, bringing the total proposed settlement amount to $7.2 billion. The deal requires U.S. District Judge John Gleeson of Brooklyn to sign off on case In re Payment Interchange Fee and Merchant Discount Antitrust Litigation, which would take until sometime in 2013.

While large grocery chains including Safeway and Kroger Co have supported the settlement, big retail names including the National Retail Federation (NRF), Wal-Mart and Starbucks along with other industry groups have been actively opposing the pay off. On September 25th, the National Restaurant Association (NRA), threw its hat in the ring and officially joined the opposition who agree that $7.2 billion is a drop in the bucket compared to the yearly interchange fees incurred. In addition, they want stricter mandates that will not allow swipe fees to rise unchecked.

The NRA is the largest of the six trade groups fighting the settlement, and represents the $600 million net worth of the U.S. restaurant industry. The fear among the opposition is that the settlement will not change the marketplace where swipe fees are set, only temporarily alleviating financial stress without creating reform and transparency in the interchange system. Credit card companies believe that the opposition groups will never be satisfied. The NRA fears that agreeing to the terms of the settlement will prevent any future interchange lawsuits that could create the desired reform, preventing merchants or consumers from battling higher swipe fees.

Photo Credit