Visa, Mastercard and some major banks agreed to pay retailers at least $6 billion to settle a case that alleged card issuers conspired to fix fees to pay to the card companies. The result of the lawsuit, however, may have repercussions for consumers, however, as supermarkets and other retailers are allowed to charge customers more money if they pay using a credit card.
Seen as the largest antitrust settlement in U.S. history, merchants long complained about the “swipe” or “interchange” fees they had to pay to banks for each credit card purchase made. These swipe fees are meant to cover the processing of the payments and are set by the card companies, where an amount is deducted from each transaction by the bank issuing the card, effectively making it a cost of business for merchants, according to the lawsuits.
As reimbursement for this cost, the card companies and banks will reimburse $6 billion, and provide a reduction in swipe fees for eight months, which has an estimated consideration to stores valued at about $1.2 billion, accounting for the full settlement agreed upon, according to the lawyers for the plaintiff retailers.
In addition to allowing merchants to collectively bargain on their swipe fees, customers will also be informed of the various fees involved when using a credit card, along with the various surcharges involved. However, 10 states prohibit that practice, and in those states, such disclosures will not occur, and this includes large states like California, New York and Texas.
Not all class members are happy with the settlement, however, as one class plaintiff, the National Association of Convenience Stores, rejected the settlement inÂ a statement: “Not only does the proposed settlement fail to introduce competition and transparency, it actually provides Visa and MasterCard with the tools to continue to shield swipe fees from market forces,” said Tom Robinson, president of Robinson Oil Corp.
Further, Robinson said, in light of the $50 billion paid to the card companies in swipe fees, the settlement itself is a drop in the bucket.
To others in the class, plaintiffs attorney Bonny Sweeney sums it up:
“This is an historic settlement.”
Story is HERE.
The banks want to drop off the radar, so they’re doing everything they can to look like a responsible and good corporate citizen, and they’re even willing to turn on their own provided there is a realistic scenario where they still survive as long as some scapegoats are tossed in as a sacrifice.
Thus, it’s not a good thing to keep cases like this around while people are beginning to understand what Libor is, so you might as well sorta/kinda admit you rigged the game and cheated and pay a fine while appearing somewhat legitimate and move on, because that’s infinitely better than handcuffs and pitchforks at the McMansion you bought from stealing off others as a banker.
This lawsuit settlement is a PR stunt, but if anything, it allows others to discuss how broken and corrupt the banks are, by mentioning the fact that the banks basically colluded and rigged credit card fees so that they can make the best buck and doing that for years, only to pay a fine after all those years of ripping customers and retailers off.
Oh, sorry, “it’s alleged” (right), but you know what I mean. These guys are obvious crooks, but at least it’s now coming out into the open.