Major US Retailers File Sweep Fee Lawsuit Against Visa and MasterCard
The prevalence of plastic over paper for shoppers all over the world is rapidly changing the way retailers and credit institutions view each payment transaction, and some retailers are not happy about the changes that are taking place. Several major US retailers have accused credit giants Visa and MasterCard of inflating transaction fees and putting additional strain on retailers to cover the bill. Lawsuits around this issue have grown stronger recently.
After breaking away from a proposed settlement of over $7 billion in this matter, a group of huge retail chains including Macy’s and Target pursued legal action against Visa and MasterCard. Countless merchants, both small and large, will be affected by the increase in swipe fees that the credit institutions have instituted, and the merchants have chosen to continue the fight rather than backing out and accepting the settlement.
As the convenience of credit and debit payment has steadily increased over the years, fewer and fewer shoppers are carrying cash when they leave home. Rather than go through the trouble of visiting their banks for cash withdrawals, shoppers can simply pay through debit or credit cards and resolve their accounts online. The added convenience of this kind of payment is great for the average shopper, but it places increased financial strain on businesses.
Every credit transaction has a price–the reason that so many businesses impose a minimum purchase on credit transactions. Credit institutions, in turn, pay the banks with which they are connected. The result is a massive payment chain that doesn’t affect the average shopper, but has serious implications for the businesses and credit providers that process countless transactions every day. Inflated processing fees from Visa and MasterCard, being perceived as unfairly high by many retailers, have caused a heated legal battle in recent months.
Visa and MasterCard’s proposed settlement with the merchants pursuing legal action offered significant compensation in order to have the charges dropped, but several retailers opted out of the settlement. Sources indicated that the settlement offer required merchants to make broad litigation agreements that would hinder them from pursuing legal action against the credit giants in the future. Furthermore, they view the compensation to be inadequate, and accepting the settlement would mean accepting the newly inflated transaction fees as well.
Several major retailers are rallying around this cause. The businesses continue to seek what they believe to be fair recompense for the credit processing fee issue. They can’t change the shopping habits of individual consumers, but they can fight for a reasonable agreement with the credit providers that have such a great impact on their businesses. Retailers everywhere are opting out of the credit companies’ settlement.
In an era of shopping in which credit is so common, credit companies cannot make changes like this so easily. Organizations like RateSupermarket Inc. allow even the average consumer to find huge amounts of information on credit rates from lenders all over the world, and this transparency has brought to light a major development in credit processing. Major retailers are taking a stand against the credit companies, and only time will tell the outcome.