21 October 2014

Wal-Mart sues Visa over card fees

27 March 2014  |  4750 views  |  2 credit card

Wal-Mart has filed a lawsuit against Visa, accusing the card giant of engaging with some of the nation's largest banks to illegally fix interchange fees for merchants.

In July 2012 US retailers reached a $7.25 billion class action settlement with Visa and MasterCard over credit card interchange fees, seemingly ending a seven-year legal dispute.

However, retailers - including Wal-Mart - soon began pulling out of the deal, arguing for heftier fines and deeper reforms. Last summer Visa sued Wal-Mart in a bid to "prevent the continuation of endless, wasteful litigation".

Now Wal-Mart has filed its own suit in the US district court for the western district of Arkansas. The retail giant says that not only have Visa and the banks conspired to fix fees, they have conspired to enact rules preventing Wal-Mart from protecting itself against the fees.

Banks have schemed to not compete with each other for merchant acceptance and engaged with Visa in illegal monopolisation, says the suit.

During the time covered by the damages period - 1 January 2004 to 27 November 2012 - Wal-Mart claims that the defendants imposed interchange and network fees of more than $350 billion on America's merchants and consumers.

The retailer says it has suffered "enormous" losses and is asking the court to award damages of $5 billion.

Comments: (2)

Alexander Peschkoff - TEDIPAY - London | 27 March, 2014, 09:55

Is that a hedge against potentially slow uptake of MCX or "adding insult to injury", i.e. hitting Visa on two fronts?..

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Callum Godwin - CMS Payments Intelligence - Manchester | 27 March, 2014, 11:53

Wal-Mart, as by far America’s largest retailer with $329bn of US revenue in 2012, obviously stands to gain and lose the most from these interchange (or “swipe”) fee battles. The interchange bill for this one retailer alone could well top $2bn per annum, which is particularly frustrating for them when you consider that these fees are fixed and non-negotiable. 

It did appear at one stage in 2012 like we were nearing a resolution for the US, although in reality the offer from the card networks was always going to be considered punitive; an offer of just $7.25bn (comprised of a one-off $6.05bn and a 3 month commitment to lower rates worth $1.2bn) to compensate for around $36bn of annual charges. What the US credit card market really needs is not one-off settlements, but sustainable interchange regulation.

 

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