Retail Group Appeals Visa/MasterCard Swipe Fee Settlement

The National Retail Federation (NRF) has filed an appeal with the federal court in New York regarding a recent class action settlement involving the fees that retailers pay to credit card companies each time a customer pays with a card. The country’s largest retail group is calling the swipe fee settlement “flawed.”

In December, U.S. District Judge John Gleeson approved the $6+ billion class action settlement agreement between Visa and MasterCard and merchants over fees that are charged each time a customer swipes a credit or debit card. Known as interchange fees, the plaintiffs argued that they had little leg room to negotiate the 2- to 5-percent swipe fees. Because of this, retailers said that they had to pass on the cost to consumers.

The ruling of Judge Gleeson did not satisfy the NRF and other retail organizations, who argue that the settlement deal will not prevent Visa and MasterCard from raising swipe fees in the future.

In a statement, Mallory Duncan, the general counsel of the retail group, said that the swipe fee settlement “does nothing to reform the price-fixing payments system that has let credit card swipe fees skyrocket over the past decade and nothing to keep them from continuing to soar in the future.”

The retail group has the backing of several retail organizations, including the National Association of Convenience Stores and the National Community Pharmacists Association.

As a response, the Electronic Payments Coalition, a group whose members include Visa and MasterCard, issued a statement regarding the appeal:

“After nearly a decade of negotiations, the court has determined that this settlement is the best interest of all parties involved. This is simply a political ploy by a few big box retailers– for whom enough is never enough– that disregards the millions of retailers who are supportive of the settlement. These same tired arguments were raised over and over during the negotiations and would have been included in the final terms if they had any merit.”

In giving his approval, Judge Gleeson said that an important facet of the Visa MasterCard swipe fee settlement is that it provides certain rights to merchants that they previously lacked.

“For the first time, merchants will be empowered to expose hidden bank fees to their customers, educate them about those fees, and use that information to influence their customers’ choices of payment methods. In short, the settlement gives merchants an opportunity at the point of sale to stimulate the sort of network price competition that can exert the downward pressure on interchange fees they seek,” Judge Gleeson said.

A status conference regarding the next steps in the case, including distribution of settlement funds, will be held on Jan. 10, 2014. Details on how to file a claim for the Visa/MasterCard swipe fee settlement were not posted to the Settlement Administrator website at publish time for this article. Top Class Actions will update our readers as soon as claim filing instructions are available.

Class plaintiffs are represented by Robbins Geller Rudman & Dowd LLP, Robins Kaplan Miller & Ciresi LLP and Berger & Montague PC.

The Visa/MasterCard Swipe Fee Class Action Lawsuit is In re: Payment Card Interchange Fee and Merchant Discount Antitrust Litigation, Case No. 1:05-md-01720, in the U.S. District Court for the Eastern District of New York.

UPDATE: On June 30, 2016, the 2nd U.S. Circuit Court of Appeals rejected a $7.25 billion antitrust settlement with merchants over Visa and MasterCard’s swipe fees, finding that merchants who accept the cards after the settlement is finalized would not be adequately represented in the deal.

UPDATE 2: On Dec. 1, 2016, merchants seeking to wrap up a credit card swipe fee class action settlement are appealing their case to the U.S. Supreme Court.

UPDATE 3: June 2018, Visa and MasterCard are approaching a settlement deal over a swipe fee class action lawsuit after more than a decade of litigation. The settlement amount is estimated to be around $6.5 billion and is expected to be reached by mid-July.

UPDATE 4: On Sept. 18, 2018, Visa, MasterCard, and numerous banks including Bank of America, Barclays, JPMorgan Chase, Citibank, and SunTrust Bank, have reached a new $6.2 billion settlement deal to resolve a massive antitrust swipe fee multidistrict litigation.

UPDATE 5: On Jan. 24, 2019, a New York federal judge preliminarily approved a massive Visa, Mastercard swipe fee settlement, which would add an additional $900 million for merchant Class Members.

UPDATE 6: March 2019, a settlement website has recently been established for Class Members in the Visa, Mastercard swipe fee class action lawsuit. While Claim Forms are not currently available, the website provides an opportunity for Class Members to pre-register to receive one.