Final Hearing Today on Swipe Fee Battle
The eight-year legal battle over interchange fees will culminate in a final hearing today in a Brooklyn federal court.
U.S. District Judge John Gleeson will hear arguments on whether to give final approval to what is believed to be the largest antitrust settlement ever. His decision is expected to take anywhere from one to four months.
The proposed agreement was reached in July 2012 when MasterCard, Visa and major banks agreed to pay more than $6 billion to resolve accusations that they engaged in anti-competitive practices and price fixing in payment processing. In addition, credit card companies agreed to reduce swipe fees for eight months, an adjustment valued at $1.2 billion.
The National Retail Federation and a number of large retailers, including Walmart, Costco, Gap, Lowe’s, Nike and Starbucks, have chosen not to participate in the settlement because they felt it would not keep swipe fees from increasing in the future. In addition, if they participated in the settlement, they would be restricted from taking any future legal action for anti-competitive behavior.
With those retailers not participating in the settlement, the value of the settlement is now approximately $5.7 billion.
Any retailer who has accepted the settlement is eligible for a share of the settlement but must give up the right to file future lawsuits over the fees and other restrictive rules.
The NRF says this amount is less than three months’ worth of swipe fee charges, and the small retailers hit hardest by the fees would give up their rights for as little as a few hundred dollars.
“The proposed settlement does nothing to bring swipe fees under control and would give Visa and MasterCard a legal blessing to continue their abuse of merchants and consumers indefinitely,” NRF Senior Vice President and General Counsel Mallory Duncan said in a statement. “No settlement at all would be better than this one-sided ‘agreement’ written by the card companies for the card companies that would tie retailers’ hands for decades to come.”