The controversial settlement between a number of retail groups and the world’s two largest processors of debit and credit card payments is set to move forward after receiving preliminary approval, but objections to the deal still linger.
U.S. District Court Judge John Gleeson recently said that the antitrust settlement between merchants groups and both Visa and MasterCard could move forward, according to a report from Reuters. The deal, which would pay some 8 million retailers across the country roughly $7.2 billion, both in the form of cash payments and temporarily reduced swipe fees, has been a source of considerable debate since it was first announced.
Under the terms of the deal, Visa and MasterCard also have to alter their policies about the ways in which merchants can charge consumers for using their debit or credit cards to complete transactions, the report said. That has to come within 60 days of the deal receiving preliminary approval, which took place on November 9. However, laws in individual states might alter those rules.
Of course, the preliminary approval of the deal doesn’t necessarily mean it will be enacted, the report said. In giving his ruling that it could move forward, Gleeson also acknowledged the many dissenting voices in the merchant industry, including those of giants like Walmart, Target and the Home Depot. He further stated that final approval will require both parties in the class action suit to clear far more stringent legal hurdles.
Those companies and trade groups that object to the deal say that the $7.2 billion payout is relatively small compared to what Visa and MasterCard received over the course of time the suit covers, the report said. They currently make as much as $30 billion annually from swipe fees alone, and therefore the agreed-upon deal won’t cost them much, at least relatively. Further, they say that because the terms of the deal also make it so that the payment processors cannot be sued over swipe fees again, which they say strips them of legal rights they should be able to retain.
[Credit Cards: Research and compare credit cards at Credit.com]
Visa and MasterCard together process billions of transactions around the world every year, and have been very vocal in pushing for this settlement, which is another reason those outside the suit believe it will ultimately be too beneficial for the companies.
Image: ptmoney.com, via Flickr