A proposed settlement between the world’s two largest processors of debit and credit card payments, and a number of merchant groups and major chains, is now awaiting two stages of approval from a federal judge.
The settlement, reached between 19 parties representing both merchant groups and major national retail chains, and both Visa and MasterCard, is now in the hands of U.S. District Judge John Gleeson in Brooklyn, New York, according to a report from Reuters. If approved, the deal would cause Visa and MasterCard to pay about $7.25 billion to the groups involved, in the form of both cash payments and temporarily reduced prices on the swipe fees they charge to merchants for processing debit and credit card transactions.
Of that, $6.05 billion would be paid directly, and the remaining $1.2 billion would come in lower swipe fees for several months, the report said. However, while some of the groups involved in the suit – and both Visa and MasterCard – have expressed support for the agreement, there remains a large group of plaintiffs that is staunchly opposed to it.
In particular, 10 of the 19 original parties to the suit – including the National Retail Federation and Wal-Mart Stores – say the deal is unfair for two reasons, the report said. First, it offers little in the way of an actual overhaul of the swipe fee structures under which merchants have to live, and second, the acceptance of the settlement would in turn lead to their losing the right to sue the two companies over swipe fees in the future, regardless of what they do.
“The lawyers and handful of retailers who support the settlement do not represent the retail industry,” Mallory Duncan, senior vice president and general counsel for the National Retail Federation, told the news agency.
Meanwhile, those who do support the settlement say that it gives them the meaningful ability to discuss with their customers the effects swipe fees have on businesses’ bottom lines, the report said. Visa and MasterCard have also come out in support of the approval of the settlement.
Some experts say that if this settlement is approved, it might increase prices for consumers who use certain credit and debit cards to complete purchases, which in turn can theoretically lead to more debt.
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