A recent settlement between the world’s two largest payment processors and a number of merchant groups has drawn the ire of perhaps the most influential retail organization in the U.S., and it is now considering potential legal action to stop it.
The National Retail Federation recently received the approval of its board of directors to pursue legal action as a means of putting a stop to the pending settlement between some merchant groups and payment processors Visa and MasterCard, the organization reported. The settlement, which would grant the complainants $7.25 billion in all, has been heavily criticized as being ultimately unfair to merchants.
The NRF was not a party to the original suit, which covered eight years of what plaintiffs considered significant and unfair increases in swipe fees, and there may be some roadblocks to its getting involved in trying to stop it, the report said. First, the judge presiding over the case has yet to outline how outside parties can enter proceedings, and second, he has also not yet defined whether the suit is a class action.
“A key question for the judge is whether this settlement is fair to the nation’s retailers,” NRF president and chief executive officer Matthew Shay said. “From what we have heard, it unequivocally is not. NRF’s membership reflects the vast majority of retailers from Main Street small businesses to some of the nation’s best-known brands. Short of a company-by-company poll, a vote by the NRF board is the clearest test of what merchants think.”
For its part, the NRF believes that the suit, had it gone to a trial, could have been worth considerably more than the agreed value to the merchant groups involved, the report said. In fact, it could have carried a value of as much as a few hundred billion dollars, considering the length of time in question and rules that allow damages in antitrust cases to be tripled.
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The Federal Reserve Board recently put into place rules that limits the amount merchants can be charged for processing debit card transactions, as a means of reducing retailers’ overall costs. Payment processors were very opposed to the decision, which they said could cost them billions a year in lost revenues, but the Fed left credit card transaction fees untouched.