Wal Mart has reached out to millions of retailers and merchants across the country with the message to reject the massive class action lawsuit that orders banks, Visa, MasterCard and other credit card companies to pay more than $6 billion. The proposed settlement hasn’t made it through the legal channels yet, but if and when it’s passed, it will cost those banks and card carriers $6 billion.
In early July, retailers chalked one up in the win column when a years-long settlement was reached that included allegations of fixing merchant fees associated with eery credit card and debit card transaction. Part of the settlement allows retailers to pass on much of those interchange fees to consumers. Sometimes referred to as swipe fees, they average around 2% of a consumer’s total receipt and have been a thorn in the sides of the collective American retailer for years.
Wal Mart and Target have teamed up to speak out against the settlement. Wal Mart says that the settlement offers no restrictions for credit card companies to continue to raise fees for merchants. The merchants will pass those fees on to the consumer. Wal Mart and Target both take issue with one clause that would prevent them and other retailers to joining in on classic action suits against the banks and credit card networks. Wal Mart calls it “transparency” efforts and released a statement on Tuesday that read in part,
As Walmart continues to seek reform that will provide transparency and true competition among financial institutions, we encourage all merchants to put consumers first and reject the settlement.
Meanwhile, Target’s been issuing it owns statements, including one that refers to the entire system as “broken” and that the settlement would offer no long term relief for either the merchants nor the consumer.
MasterCard reminds the retail giants that lawsuits encompassed many years and it insists the results ere fair for all involved, including the consumer. Despite the different opinions over the proposed settlement, the card network acknowledges different opinions, depending on who’s perspective it’s coming from. In a statement to Wal Mart, MasterCard noted in an email,
The provisions of the settlement, including the flexibility for merchants to impose checkout fees, new negotiating tools for merchants and the scope of the release, was reached with the assistance of the court and was supported by the merchant class representing millions of large and small retailers, and prominent trade groups across the country.
It’s the flexibility for charging fees to consumers many are concerned about.
For its part, Visa is referring requests to the Electronic Payments Coalition, a group that represents credit card companies, banks and credit unions. Referring to Wal Mart’s position as “at absolute odds with the class representative plaintiffs”, it insists the retail giant is overlooking the intimate involvement of millions of plaintiffs who were involved in “extensive negotiations”. Its statement then concluded that Wal Mart’s individual “self interest” isn’t always in line with the interests of its customers and competition. It too says that the lawsuit has dragged on for six years.
Initially, the suit was filed by some of the nation’s largest retailers, including Safeway, Walgreen and Kroger. They claimed the credit card companies were “price fixing” fees and other rates. The credit card companies said their prices were reasonable, especially considering consumers spend more when they’re using credit cards or debit cards, which meant a better bottom line for retailers. The settlement does not apply to debit cards, which have grown in popularity for small-value transactions.