LIVE VIDEO: Good Morning Show Weekend    Watch

Walmart Not Buying The Visa-MasterCard $6 Billion Settlement Deal

7:01 PM, Jul 24, 2012   |    comments
  • Share
  • Print
  • - A A A +

BENTONVILLE, Ark-- Wal-Mart Stores is urging retailers to reject a proposed $6 billion settlement that Visa, MasterCard and major banks have agreed to pay retailers for alleged fee fixing.

The settlement, reached earlier this month, had been considered a victory for retailers. It settled a lawsuit alleging that card issuers conspired to fix merchants' fees for accepting credit cards.

Retailers have long complained about the billions of dollars in "swipe" or "interchange" fees they have had to pay, which average about 2% of the price of a purchase.

Under the settlement, stores will be allowed to charge customers more if they pay with a credit card.

But the world's largest retailer said Tuesday that the settlement doesn't restrict credit card issuers from continually raising fees merchants must pay when shoppers use their cards. Wal-Mart also says the settlement would require retailers to waive their rights to take action against card issuers.

"As Walmart continues to seek reform that will provide transparency and true competition among financial institutions, we encourage all merchants to put consumers first and reject the settlement," Wal-Mart said in a statement.

Wal-Mart joins Target in speaking out against the settlement.

On Friday, Target said the proposed settlement would "perpetuate a broken system, restrict retailers from any future legal action and offer no long-term relief for retailers or consumers."

And earlier in July, the National Association of Convenience Stores said it would fight the settlement because the group doesn't think the deal adequately addresses the issue of how much control Visa, MasterCard and banks have over merchants.

MasterCard responded to Wal-Mart's statement by saying while some retailers have different opinions, the settlement was reached after years of litigation and months of negotiating.

"The provisions of the settlement, including the flexibility for merchants to impose checkout fees, new negotiating tools for merchants and the scope of the release, was reached with the assistance of the court and was supported by the merchant class representing millions of large and small retailers, and prominent trade groups across the country," spokesman James Issokson said in an e-mail.

Visa referred a request for comment to the Electronic Payments Coalition, which represents Visa, MasterCard and card issuers from most banks and credit unions. The coalition said Wal-Mart's statement is "at absolute odds with the class representative plaintiffs and the court appointed class counsel representing millions of merchants who were intimately involved in the extensive negotiations."

"Walmart's individual self-interest is not always parallel with the interests of the millions of other U.S. merchants," the coalition said.

The dispute between stores and banks dates to 2005. That's when large retailers, including Kroger, Safeway and Walgreen began filing price-fixing lawsuits against Visa, MasterCard and other banks.

Credit card companies have long defended the fees they charge stores. They say stores benefit from being able to accept credit and debit cards from customers, who often spend more when they're using plastic instead of cash or checks.

As part of the settlement, credit card companies have agreed to reduce swipe fees for eight months. The temporary reprieve on fees is valued at $1.2 billion. The settlement does not apply to debit cards, which have grown in popularity for small-value transactions.


Most Watched Videos