In the past few weeks, many major retail groups have gone to some lengths to try to stop the proposed settlement between a number of complainants and the world’s two largest payment processing firms over the swipe fees the latter charged for debit and credit transactions in the last several years.
Now, a number of groups have submitted a letter to lawmakers in both the U.S. Senate and House of Representatives asking them to step in and prevent a U.S. court from approving the agreement between members of a number of suits against Visa and MasterCard, and those payment processors, according to a report from the Association for Convenience and Fuel Retailing, one of the groups signing the letters. Perhaps the primary complaint in these letters is that an approved settlement would further deepen Visa and MasterCard’s hold on the credit and debit card payment processing industries.
“The proposed settlement, which was negotiated by Visa, MasterCard and lawyers purporting to represent the merchant community, is one-sided and preserves the very anticompetitive actions that were the genesis of the lawsuits,” the letters said. “Quite simply, the proposed settlement is a bad deal for merchants and their customers.”
The issue, these groups believe, is that if approved, the agreement would apply not only to the current plaintiffs in the case, but also all 8 million merchants across the U.S., as well as any other organizations that might decide to accept Visa and MasterCard payments in the future, the report said. In particular, one provision of the deal is that companies would not be able to sue the payment processors over swipe fees again in the future.
The letters also relied on terms like “duopoly,” and “price-fixing,” which could be concerning to some lawmakers, the report said. Further, they said such a deal might limit future innovations related to bringing more competition to the payment processing market.
In all, the proposed settlement would see Visa and MasterCard give merchant groups about $7.25 billion in concessions, including both cash payments as well as temporary reductions in the swipe fees they charge for every purchase processed in the several months following the agreement being approved. Many larger merchant groups, including the National Retail Federation, have opposed these terms because they say that these companies earned more from their practices than they are giving back.
Image: rpongsaj, via Flickr