Visa, MasterCard Swipe Deal Faces Retail Group Opposition
The National Retail Federation said it will try to block a settlement of as much as $7.25 billion with Visa Inc. (V) and MasterCard Inc. (MA) over the fees they charge stores when customers pay with credit cards.
The Washington-based group, which represents more than 9,000 retailers, said the proposed settlement of merchants’ price-fixing claims does nothing to prevent Visa and MasterCard from raising the so-called swipe fees in the future.
“We will try to find the most forceful way we can to let the court know that this deal is so unfair that it needs to be rejected at the outset,” Mallory Duncan, the group’s general counsel, said today in a phone interview.
The settlement, which must be approved by a federal judge, would put to rest about seven years of litigation over allegations that San Francisco-based Visa and Purchase, New York-based MasterCard conspired to fix the fees.
At today’s hearing on the status of the settlement, U.S. Magistrate Judge James Orenstein rejected a request for information made by a lawyer, Jeffrey Shinder, who is representing some of the objecting groups, including the National Cooperative Grocers Association and the National Association of Convenience Stores.
Orenstein said Shinder’s request seeking full access to the court record in the case was “premature.”.
K. Craig Wildfang, a lawyer for the plaintiffs who is advocating for the settlement, said after the hearing that he is “absolutely” confident the deal will move forward.
“This is not really the way class actions get resolved,” he said about NRF’s opposition. “We don’t really take a vote.”
Trish Wexler, a spokeswoman for the Electronic Payments Coalition, which favors the settlement, said that the NRF and other groups have “political ulterior motives” for opposing the deal.
U.S. Senator Richard Durbin’s office has told retailers that they may lose out on legislative opportunities to rein in credit-card fees if they support the settlement. Durbin, a Democrat from Illinois, secured the inclusion of limits on swipe fees for debit cards in the 2010 Dodd-Frank Act, trimming revenue for the largest U.S. banks by about $8 billion.
Opposition may also be related to recently announced efforts to establish payment networks that may compete with Visa and MasterCard, she said.
In a conference call on July 25, Visa Chairman and Chief Executive Officer Joseph W. Saunders told investors that he expected a federal judge to grant preliminary approval to the settlement this year.
Visa executives “remain confident” that the settlement will be approved, Chief Financial Officer Byron Pollitt said today at an investor conference in Las Vegas.
“We’re getting a lot of noise, and I think we will continue to have a lot of noise with regards to the merchants’ side not being happy with the suit or the settlement,” Pollitt said.
The case is In re Payment Card Interchange Fee and Merchant Discount Antitrust Litigation, 05-md-01720, U.S. District Court, Eastern District of New York (Brooklyn).
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