Wal-Mart Asks Retailers to Reject Swipe Fee Deal
NEW YORK (CNNMoney) — Wal-Mart, the world’s largest retailer, is asking “all merchants” to reject the proposed multi-billion dollar settlement that aims to quell a longstanding dispute between credit card issuers and millions of merchants over “swipe fees.”
Visa, MasterCard and major banks agreed earlier this month to pay merchants $7.2 billion for damages stemming from an alleged conspiracy to fix credit-card processing fees.
As past of the class-action settlement, which requires a judge’s approval, merchants will also get a reduction in the fees, but only for eight months.
But Wal-Mart came out Tuesday against the proposed settlement. It said it doesn’t stop credit card networks from “continually increasing hidden swipe fees, which already cost consumers tens of billions of dollars each year.”
“The proposed settlement would require merchants to broadly waive their rights to take action against the credit card networks for detrimental conduct or acts,” the retailer said in a statement. “We encourage all merchants to put consumers first and reject the settlement.”
Last week, Wal-Mart’s big-box rival Target issued a statement in which it, too, called the proposed swipe fee “bad for both retailers and consumers.”
Target said the deal would “perpetuate a broken system [and] restrict retailers from any future legal action.”
Wal-Mart and Target are not among the 19 plaintiffs representing roughly 7 million merchants who initiated the class-action suit, according to lawyers representing the plaintiffs.
Still, some aspects of the proposed deal — such as allowing merchants to add a surcharge to a bill if their customers decide to pay with a credit card — would be applicable to all retailers.
Target said it has no interest in surcharging customers who use credit and debit cards “in order to allow Visa and MasterCard to continue charging unfair fees.”
Small merchants also expressed their disappointment with the deal, saying it doesn’t go far enough.
Deal in trouble? The National Association of Convenience Stores, one of the 19 plaintiffs that brought the class action suit against Visa and MasterCard, has already rejected it, said Jeffrey Shinder, managing partner with Constantine Cannon, who is representing the stores.
“There is growing momentum against this deal that will put tremendous pressure on its viability,” said Shinder. “This deal may ultimately unravel.”
“We are the first among the plaintiffs to reject the deal and I suspect we won’t be the last,” said Jeff Lenard, spokesman for the convenience stores’ group, whose members total more than 140,000 merchants nationwide.
“This proposed deal offers temporary relief to merchants at best. At worst, it is a stunt in a trap,” he said.
Lawyers for Visa and MasterCard were not immediately available for comment. Attorneys representing other plaintiffs in the class action suit also could not immediately be reached for comment.
™ & © 2012 Cable News Network, Inc., a Time Warner Company. All rights reserved.