The recent $7.2 billion settlement between credit card companies and retailers has not ended in concession. In fact, the National Retail Federation will combat the amount, which is supposed to offset the unfair charges paid by retailers to credit card companies.
There has been much talk concerning the recent multi-billion dollar settlement between credit card companies and the country’s largest retailers but the biggest development comes as a dispute.
Indeed, the National Retail Federation, the largest retail trade federation in the world aims to continue fighting the settlement. They claim that while the proposal may help ease some of the immediate financial strain, it has not helped in terms of long term of effect.
More specifically, they say that it does not promote healthy competition and continues to allow swipe fees—the overextension of which was the very thing the proposal was supposed to remedy. According to Matthew Shay, president of the National Retail Federation,
The proposal is a lose-lose-lose for merchants, consumers and competition. NRF will take any and all steps necessary to oppose the settlement as it is currently proposed and will work toward real reform of the swipe fee system.
This statement is, perhaps, purposefully vague as the trade group is still looking into which avenue of legal action they should take.
The settlement in question began negotiations in July, requiring approval of Brooklyn, New York, U.S. District Judge John Gleeson before it can be enacted. Easily the largest settlement in the history of the United States, it was supposed to address a 7-year-old lawsuit that accused both Visa and MasterCard of conspiring with major banks to dramatically increase swipe fees.
Specifically, credit card companies have agreed to pay $6 billion up front and reduce swipe fees for a short amount of time. The temporary reduction is estimated to save consumers $1.2 billion over 8 months, which equals the total $7.2 billion proposal.
Strangely enough, plaintiff attorneys (all of whom are U.S. retailers) say that they do not necessarily agree with the National Retail Federations’ opposition. They plan to continue negotiations as preliminary approval is still set for October 12.
In fact, plaintiff co-lead counsel Craig Wildfang says that approval of the NRF’s opposition is still going to be up to the court. He says:
The court decides whether the requisites are met for approval,
As of right now, the settlement will allow retailers to charge their customers an extra swipe fee if they want to use their credit cards. How they choose to incorporate the fee is up to the individual retailer each fee is subject to limitations set by state laws and the contractual agreements between individual stores and the credit card companies.
In addition, the settlement will also grant merchants with the right collective bargaining power in order to have more control over swipe fee charges. This includes general protection of Visa and MasterCard from the potential for future litigation on similar legal matters.
The National Retail Federation, while perhaps the largest, is not the first trade organization to oppose the settlement. Indeed, the National Association of Convenience Stores and other trade organizations that represent smaller grocers and pharmacies have also been linked to opposition.
This, however, does not worry Trish Wexler, spokeswoman for the Electronic Payments Coalition. She claims, on behalf of the trade association that represents Visa and MasterCard, they the opposition is, in short, a political move designed to stretch the value of the settlement.
She said, in a statement:
We remain confident that the courts will approve this settlement agreement, particularly considering the years of negotiation and careful review of all evidence from both sides that has already been considered.
Similar Personal Finance News
- 3 Years In, Credit CARD Act Working – February 25, 2013
- Overwhelming Financial Truths: How They Affect Everything – May 27, 2013