Proposed Settlement in Credit Card Swipe Fee Litigation Not the End of the Story
By Mel Fabrikant Wednesday, September 11, 2013, 04:11 PM EDT
On Thursday, September 12, the U.S. District Court for the Eastern District of New York will consider the proposed settlement in the long-standing class action suit brought against Visa, MasterCard and several large banks over credit-card acceptance rules and fees. The Merchants Payments Coalition, a group of U.S. merchants and retailers concerned about the rising cost of swipe fees and the lack of competitiveness and transparency in the credit card industry, issued this statement today in advance of the scheduled hearing.
“Whether or not the court accepts this proposed settlement, the problems that merchants face – which triggered the initial litigation – will remain. The major credit card companies that together control 80 percent of the market will continue to set credit card swipe fees in a manner that amounts to price-fixing. There will be no competition and no transparency – key elements to a functional marketplace.
Swipe fees drain $50 billion a year from the bottom line of merchant businesses and consumers. Reducing these costs will help small businesses – the engine of our economy – to lower prices and increase consumer buying power which is what we need to kick-start economic growth.
As mobile payment systems continue to develop, it is critical that these innovations evolve in a way that improves cost efficiencies to the benefit of both merchants and consumers. Strong Congressional and regulatory oversight and possible future legal action will be needed to ensure that the same price-fixing system controlled by the same two entities is not carried over to these new, emerging technologies, stifling the potential to achieve consumer benefits and marketplace efficiencies.”