According to Reuters, the $7.25 billion class-action lawsuit between the two biggest credit card companies and major retailers was created to resolve stores’ claims that Visa and MasterCard conspired with major banks to fix swipe fees. The lawsuit is subject to court approval.
Involving a payment of $6 billion from Visa, MasterCard and over twelve of the country’s largest banks to stores, the settlement also includes an eight-month reduction in fees totaling about $1.2 billion.
The settlement deal would also allow stores to start charging checkout fees to customers who pay with MasterCard or Visa credit and debit cards.
Wal-Mart statement rejecting the deal called its solutions “disappointing” and saying that it “would not structurally change the broken market or prohibit credit card networks from continually increasing hidden swipe fees,” a major concern for both retailers and consumers.
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According to Forbes, these hidden swipe fees that Wal-Mart is afraid of are really the interchange fees deducted from Wal-Mart’s revenue and then supposedly passed on consumers in the form of slightly higher prices.
Another objectionable point for Wal-Mart was the release from future antitrust litigation-which Wal-Mart successfully utilized back in 2004 to the tune of $3 billion against Visa.
So far, rival Target Corp and the National Association of Convenience Stores have already voiced their disapproval and dissatisfaction with the settlement.
U.S. District Court Judge John Gleeson will be presiding over the settlement, a process that will play out in Brooklyn federal court over the next few months.
The case is In re Payment Interchange Fee and Merchant Discount Antitrust Litigation, in the U.S. District Court for the Eastern District of New York, No. 05-1720.