The swipe-fees war: It ain’t over!

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If your banking rep announces the swipe-fees war is finally over, you might just spoil his lunch by saying you’re not sitting around the campfire singing "Kum ba yah," despite a settlement in the class action that began in 2005. Retailers are demanding more.

Specifically, Visa, Mastercard and financial-institution defendants announced last week they’ve agreed to settle class claims in the litigation of credit-card interchange, or swipe fees, with retailers and the associations representing them. The proposed settlement is about $6.2 billion.

Not so fast! That’s the word this week, as retailers are now seeing the settlement, which still requires court approval, may address monetary claims but does not resolve retailers’ claims seeking changes to rules and business practices concerning merchant credit-card acceptance and payments. Many retailers and their associations, such as the National Association of Convenience Stores, which is a plaintiff in the case, are rejecting the settlement without these changes.

“The broken swipe-fee system will not be fixed simply by Visa and Mastercard throwing some money to merchants,” said Lyle Beckwith, NACS senior vice president of government relations. “These cases must bring real reform to make a difference.”

Visa and Mastercard had reached a settlement in 2012. It was met with rejection from about 8,000 retailers, including several convenience store chains. The settlement was ultimately thrown out by a federal appeals court in 2016.

The end of the litigation road came in 2017, when the Supreme Court declined to take up the case, much to the applause of the National Retail Federation, which has claimed all along that Visa and Mastercard unfairly set credit-card swipe fees.

“If this settlement had been approved, the structure of fees that drive up the prices of everything consumers buy would have been cemented into place forever,” said Mallory Duncan, NRF senior vice president and general counsel for the Washington, D.C.-based group. “Now something can finally be done to bring these fees under control.”

The Supreme Court’s decision leaves standing a ruling by the Second U.S. Circuit Court of Appeals that struck down the 2012 settlement. "Today's proposed settlement is just another symptom of our nation's broken payment ecosystem,” said Deborah White, senior vice president and retail litigation center president for the Retail Industry Leaders Association. “It still offers merchants only pennies on the dollar for the harms that they suffered as a result of the anti-competitive rules backed by the card networks and big banks.

“More importantly,” White continued, “the proposal does not provide for any changes in those rules and would limit the ability to pursue meaningful change of the rules that the payments card cartel will install to govern the payment ecosystem in the future."

NATSO, representing the nation’s travel plazas and truck stop industry, also has weighed in. “An initial review of the Payment Card Interchange Fee and Merchant Discount Antitrust Litigation document indicates that it does nothing to address the problems that merchants and their customers have with swipe fees," said Lisa Mullings, NATSO president and CEO. "This deal does not resolve merchants' concerns about the ability of credit-card companies to set inflated fees for all merchants accepting credit- and debit-card payments, nor does it deal with the card company rules that prevent any type of competitive market from taking shape."

So the 18-year battle over swipe fees continues but may finally be getting close to some resolution. And while no marine trade associations have been directly involved in the litigation, the impact of any settlement will impact dealers and marina operators.

Notably, the proposed $6.2 billion settlement is really a drop in the bucket compared to the $90 billion annually that the payment networks collect in swipe fees. “Visa and Mastercard will make this up by Christmas," White said.

Stay tuned.

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