Walmart, Retail Groups Challenge $200B Visa-Mastercard Swipe-Fee Deal
By CU Today Staff —
BROOKLYN, N.Y.—Walmart and major retail trade groups are asking a federal judge to reject a proposed Visa-Mastercard swipe-fee settlement valued by its supporters at more than $200 billion, arguing the deal provides merchants only limited relief while surrendering potentially valuable antitrust claims.
Law360 reported that the objectors want the merchant class decertified or, at minimum, merchants given the ability to opt out.
The latest objections come after U.S. District Judge Brian Cogan in June granted preliminary approval to the agreement covering more than 12 million merchants. The deal would reduce the average effective Visa and Mastercard credit interchange rate by 10 basis points for five years, cap standard consumer credit interchange rates at 1.25% for eight years and give merchants greater ability to reject certain categories of cards and impose surcharges. Reuters reported the settlement's fee reductions were estimated at about $38 billion, while attorneys supporting the agreement have said the combined changes could save merchants more than $200 billion. Visa has said the settlement would provide merchants “meaningful relief, more flexibility, and options” for accepting payments.
Opponents contend those benefits do not justify the legal claims merchants would relinquish. Payments Dive reported Walmart, Circle K and the National Association of Convenience Stores are seeking the right to opt out, while Walmart argued the mandatory settlement would provide “temporary and meager relief” while giving Visa, Mastercard and large issuing banks broad protection from future claims. Separately, the Retail Industry Leaders Association, joined by the National Retail Federation, said the agreement would leave the fundamental swipe-fee system intact while cutting off merchants' ability to challenge it. RILA said more than 1,000 other objectors filed challenges by the Sept. 14 deadline.
The National Association of Convenience Stores said the 10-basis-point reduction applies only to interchange going to card-issuing banks and would not prevent Visa and Mastercard network fees from increasing. The settlement's supporters counter that the agreement provides significant relief through lower interchange, expanded surcharging and greater flexibility over which card categories merchants accept; the Electronic Payments Coalition has called it a roughly $200 billion-plus agreement benefiting merchants. Cogan is scheduled to hold a final-approval hearing Nov. 16, when the court will consider the objections before deciding whether the settlement should become final.
Originally reported by CU Today.