Retailers are stewing and lawyers for Visa and MasterCard are celebrating and after a judge approved a settlement in the dragged-out antitrust suit over credit card interchange fees.
The settlement was proposed in July 2012 and received preliminary approval in November of that year, but approval did not come until last week. Originally proposed at $7.25 billion, the settlement now sits at $5.7 billion because of retailers that have dropped out of the case. That amount, however, still comes in as the largest settlement in antitrust history.
Swipe fees at heart of the battle
The fight over fees charged by credit card processing networks has been going on for the better part of a decade. Merchants filed the suit in 2005, unhappy with what they called price-fixing by MasterCard and Visa. Interchange fees, known as swipe fees, are charged every time a consumer uses a credit card. They usually amount to about 2-3% of each transaction, but that adds up for retailers. The National Retail Federation (NRF) claims swipe fees cost merchants and their customers an estimated $30 billion a year.
The NRF was quick to put out a statement after the settlement was approved, calling it “deeply flawed.” They made it clear that they will likely appeal the decision. Wal-Mart, Amazon, 7-Eleven and Barnes & Noble all filed notices indicating their intent to appeal, as well.
Banks, credit card networks pleased with settlement
Besides Visa and MasterCard, major banks including JPMorgan Chase, Bank of America, Citibank and Wells Fargo were all named in the suit brought by retailers. Lawyers for the banks and credit card networks said they are gratified by the approval.
The settlement calls for them to pay out the $5.7 billion, as well as giving retailers the right to charge customers a fee for credit card transactions. This has led to some worry that using a credit card will be more expensive for consumers, but so far that seems to be unfounded.
A status conference is scheduled for January 10, 2014, to determine the next steps in the case.