Credit Cards

More Big Companies Say No to Swipe-Fee Deal

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More Big Companies Say No to Swipe-Fee SettlementA recently approved settlement between the world’s two largest processors of debit or credit card payments and a number of major retail groups has proven extremely controversial, and now more companies are opting out of the agreement in protest.

Barnes and Noble, as well as a trade group representing many independent book retailers and other companies, have now opted out of the settlement agreement between retailers and Visa and MasterCard, just ahead of the deadline to do so in late May, according to a report from Publishers Weekly. The American Booksellers Association had been urging members to remove themselves from the swipe-fee deal and formally object to the settlement itself. The National Association of College Stores also opted out.

The reason for these companies to pull out of the swipe-fee deal is largely that many would receive a small portion of the $7.25 billion in payments, being made to make up for what had been called unfair practices in charging companies for processing card payments, the report said. But perhaps more important is that any companies agreeing to the deal also forfeited the right to be able to sue Visa or MasterCard over their swipe fee policies in the future, which in turn would likely allow the companies to raise rates back to the levels to which the companies objected in the first place.

“The proposed settlement does not address the core claims in the case: Visa’s and MasterCard’s price-fixing of interchange rates,” the NACS said. “The proposed settlement instead validates and protects that practice, enabling Visa and MasterCard to continue to illegally fix fees for the banks that merchants and their customers have no choice but to pay. Excessive swipe fees that would otherwise be returned to students through lower prices, grant aid, and improved student services are being misdirected toward credit card companies at a time when students are struggling to afford college.”

One final hearing about the state of the swipe-fee deal is slated for Sept. 12, with a number of major companies slated to appear and state their cases for why the settlement is unfair, the report said.

In general, swipe fees may add small percentages to each purchase price consumers pay. However, while the settlement also gives companies the ability to add surcharges to cover these costs, it’s believed that most won’t take advantage for fear of alienating customers.

Image: Hemera

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