- The National Retail Foundation applauded a court ruling striking down a $7.25 billion settlement between 19 retailers and Visa and MasterCard over card swipe fees.
- The settlement was handed down in 2012, but the appeals court ruled this week that some retailers named on the suit did not have their interests adequately represented when the lawsuit first went to court.
- The NRF said the original court settlement did nothing to stop credit card companies from drawing high transaction fees from retailers.
Retailers are trying to make clear that they don't want hush money from credit card companies—they want to stop paying them billions of dollars in interchange fees every year. While a $7.25 billion settlement sounds like it would be very difficult to walk away from, consider that about $40 billion in such fees were paid by retailers last year alone.
Many retailers agreed that the original court ruling and settlement did nothing to change the practice under which they were forced to pay these interchange fees, so several, including Macy's and Home Depot, among others, opted to withdraw from the the suit (which in turn drove the actual settlement value down to about $5.9 billion.)
“This ‘settlement’ was never a settlement on behalf of the retail industry but rather a backroom deal that failed to represent the interests of retailers,” NRF Senior Vice President and General Counsel Mallory Duncan said in a statement. “It would have given merchants pennies on the dollar for the price-fixing they have suffered at the hands of the big credit card companies and would have done nothing to end price-fixing or to lower swipe fees going forward."
Withdrawing doesn't mean retailers are lacking legal recourse against card companies though. In the last couple of months, Kroger, Wal-Mart and Home Depot have sued Visa (Home Depot also sued MasterCard) alleging the card company is forcing them into using chip card authentication practices that aren't secure just so Visa can collect a fee on signature-authenticated transactions.
Retailers aren't giving up, but neither are the card networks.