Wal-Mart Alleges Visa Transaction Fee Conspiracy

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March 28 (Bloomberg) -- Bloomberg’s Julie Hyman reports that Wal-Mart is suing Visa for $5 billion in damages over an alleged card transaction fee conspiracy on Bloomberg Television’s “Market Makers.”


Various credit card companies have been basically fighting with retailers for a long time.

There was a lawsuit if that happened that was settled in the fall involving some of the same allegations but walmart opted out of that because it wanted the opportunity to sue on its own, which it is now doing.

Essentially it says, yes, there is price fixing of the fees.

Visa essentially has recommended rates and that it recommends for all types of retailers in different categories.

And as a sort of the fee setting mechanism, that is the target of this.

What walmart is saying is there isn't a real competition between the credit card payment networks.

I was talking to an analyst on how the discount swipe fee, where the money go and how does a breakdown?

We just put it up.

Let's bring it back.

You have the interchange fee, the bulk of it.

This is the fee that is at the heart of the argument here.

That fee, by the way, goes back to the banks.

It is not kept by visa and mastercard but visa is the target of this because it sets the rates.

Then only about a 10th of a percent goes to visa or mastercard.

And then the merchant inquirer -- acquirer, the processing company, it's the remainder.

That is the nitty-gritty.

Overall fee is around 2% of that is the average.

Walmart negotiates with ease.

It is negotiate between the two parties.

Because of the volume, the amount of transactions that go through walmart, it is likely that it is able to negotiate somewhat of a lower fee.

I wonder how much is tied to the fact that walmart has been trying to do financial services on its own as well?

And not just on its own but also with other retailers.

A form something called the mcx exchange, basically an attempt to form some sort of mobile payment network on its own.

The other mobile payment networks that are out there.

Basically walmart, and other retailers, they don't necessarily like to be beholden to the credit card companies in this fashion.

So that is where it goes back to.

And of course, there was a fight over debit cards as well and you got the cap on debit card fees.

So this has been a long and contentious relationship and this is the latest in that.

It is unclear how successful this litigation will be and whether it will end up being settled.

At the very least, visa and mastercard has to pay everyone else to go away.

What is interesting is the

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