retail news in context, analysis with attitude

The Financial Times reports that “Visa, Mastercard and a group of top-tier US banks have proposed a $6.2 billion settlement of a long-running antitrust lawsuit over the card ‘swipe fees’ they charge merchants … Under the deal, the two payment groups and banks including JPMorgan Chase, Bank of America and Citigroup, agree to pay $900 million to the merchants on top of the $5.3 billion agreed under a revised 2012 settlement.”

Reuters notes that “Visa and Mastercard previously reached a $7.25 billion settlement with the merchants in the case, but that deal was thrown out by a federal appeals court in 2016 and the U.S. Supreme Court last year refused to revive it.”

The difference between this deal and the original settlement is that, as CNN notes, “many of the largest merchants in the nation, including Walmart, Target and Kroger, have already opted out of this settlement” and will be able to “negotiate better deals with Visa and MasterCard than are available to the typical retailer.”

A lawyer in the case says that “the new settlement is better than the rejected 2012 decision because larger merchants can now drop out without negating the deal for the smaller retailers.”

Still unresolved, FT writes, is the “dispute over what rules the card networks can impose on merchants … Of particular concern to many merchants is the ‘honour all cards rule’ imposed on them by both Visa and Mastercard. It states that a merchant taking any bank issuer’s Visa card, for example, must take all Visa cards. Merchant groups claim that the rule removes the incentive for banks to charge lower transaction fees.”
KC's View:
Sure, these guys can write a check … but they’re not really addressing the core problem of a lack of transparency and policies that prevent retailers from being upfront with their customers about the costs of using cards.

That’s not in consumers’ interests, nor in retailers’. It is only in the credit cards’ interests.

That’s particularly interesting in view of the new Food Marketing Institute (FMI) study, referenced below, on the importance of transparency. Maybe the credit card companies should read it.