Retailers say they will fight on as US court approves class action interchange settlement
16 December 2013 | 4824 views | 1
US retailers have vowed to fight a US District Court ruling in favour of a $5.7 billion settlement with Visa and MasterCard over credit card swipe fees.
In a ruling released late on Friday, District Judge John Gleeson said that he was satisfied with the settlement in the class action case, which was agreed in July last year. Initially set at $7.25 billion, the figure was reduced to $5.7 billion in August as a result of reductions for about 8000 merchants that opted out of the deal.
The original ruling appeared to put an end to a seven-year long tussle between retailers, banks and card schemes over the fees charged for processing credit card transactions.
However, major retailers rejected the deal, kicking off an escalating litigation battle between the card schemes and merchants.
In his ruling upholding the settlement, Gleeson wrote: "For the first time, merchants will be empowered to expose hidden bank fees to their customers, educate them about those fees and use that information to influence their customers' choices of payment methods."
The decision was met with approval by the American Bankers Association, which accused the retailers of using the courts to distort the marketplace in order to boost their own profits.
"Only time will tell if this history will repeat itself, as retailers continue to show little regard for consumers and their payment preferences," says ABA president and CEO Frank Keating. "While the banking industry may not like all the results in this case, our industry is ready to put this matter behind us and continue playing a critical role in our nation's economic growth and job creation."
The National Retail Federation, however, expressed disappointment at the ruling, saying that it would do nothing to reduce swipe fees or keep them from rising in the future.
In a statement, the trade association says: "The settlement permanently ties the hands of thousands of businesses who wanted nothing to do with this misguided case, and a decision to approve it violates established law and common sense. We are reviewing the ruling and will take whatever steps are necessary to protect the rights of merchants and safeguard the pocketbooks of their customers."