The National Restaurant Association is the latest group to oppose the proposed $7.2 billion settlement aimed to remedy the fee debacle between retailers and major credit card companies like Visa and MasterCard. Six trade groups have made themselves heard in the current dispute between retailers and major credit card companies.
The National Restaurant Association, or NRA, represents the overall $600 billion restaurant industry in the United States and is the latest to voice their opinion on the case. Their major gripe is that the settlement would hinder the ability of many merchants who use MasterCard and Visa from filing future lawsuits in regards to similar interchange issues.
According to NRA President and Chief Executive Dawn Sweeney,
There is strong concern that the proposed settlement agreement will not achieve the litigation’s most critical goal – to fundamentally change a broken marketplace in which swipe fees are set.
Indeed, “swipe fees” are the area of concern for all parties involved. This has been a particularly difficult issue for retailers who have encountered discouraged customers who dislike the additional fees they have to pay just to swipe their card. In light of these things the Board of Directors at the NRA voted, unanimously, to support the existing opposition. In fact, the NRA was already in the process of requesting reformation that would allow for better transparency to the existing interchange system as well as reduce costs. Obviously they oppose the settlement because it does not accomplish either of these things.
Although the antitrust settlement went into negotiations in July it still requires approval from Brooklyn, NY U.S. District Judge John Gleeson, who announced that the process could continue to stretch out into 2013. If and when the measure is approved, however, it would make history as the largest settlement of its kind, taking 7 years to close and involving more than $7 billion overall. As you may know, this number includes a payout of $6 billion in restitution to retailers “damaged” by the high interchange, as well as a temporary reduction in this fees (slated to save retailers an estimated $1.2 billion, hence the $7.2 billion settlement).
Things are not quite so cut-and-dry, however. For instance, while the NRA opposes the settlement, major grocers like Kroger Co and Safeway Inc are in favor of it. The NRA does have some relief, though, as the National Retail Federation (NRF) also opposes the settlement, along with international retail powerhouses Wal-Mart Stores Inc and Starbucks Corp. Other smaller, lesser-known retailers also oppose the settlement, which continues to complicate the negotiation.
As a matter of fact, the NRF has been quoted saying that the settlement will result in a “lose-lose-lose” situation, noting that it will not help anyone involved: merchants, consumers, and healthy competition. Furthermore, they attest that once the temporary stopgap expires, credit card companies could increase transaction fees without bias or meter.
NRA executive vice president for policy and government affairs, Scott Defife, reports on a more reasonable and fair stipulation. Quite plainly, he states:
If you’re going to opt in to the class, you can be bound by the terms. But, if you are not going to opt in to the class, you should not be.
If only things could be that simple. Trish Wexler, spokeswoman for the Electronic Payments Coalition, the company representing Visa and MasterCard in this negotiation, notes the NRA has already had an opportunity to voice their concerns and vote on the process. She says
Instead of accepting the benefits of the settlement, these groups want even more, and will clearly never be satisfied.
Indeed, if this is the case the courts have hard road ahead of them as the parties reconvene on Tursday.