Merrymaking moment finally makes way to merchants in US! MasterCard, Visa and leading banks ran into an agreement late Friday to resolve a long-running legal feud with retailers over the fees charged on retail stores for accepting credit cards.
As per the settlement, retailers will be getting reimbursement of around US$6 billion.
The clash of retail stores and major banks broke open way back in 2005 when various prominent retailers, including the likes of Walgreen Co., Kroger Co. and Safeway Inc., knocked the courts with lawsuits aimed at fixing the prices applicable on the service. The strings of lawsuits handcuffed a number of leading banks, Visa as well as MasterCard.
The retailers then accused a card label issuers of conspiring to fix the fees being charged on retailers for accepting credit and withdraw cards; although, the fee depends specifically on the type of store and label issues and is generally around 2 percent of the total cost of purchase.
Following the settlement, retailers like Rite Aid and Kroger are free to charge their customers more in case they make payment using credit cards, just to cover up the fees effectively.
The Friday pact was processed by lawyers overseeing the largest antitrust settlement ever in the history of United States. “These new rules will give merchants the tools they need to put pressure on the credit card networks to lower interchange or swipe fees, which are the second-or third-highest cost of doing business for many retailers,” claimed trial counsel at Robbins Geller Rudman & Dowd LLP, Patrick J. Coughlin.
A big victory for merchants
The settlement is being viewed as a substantial win for merchants who, since a real long time, had been unremittingly complaining about the heavy loss they suffer in terms of "interchange" or “swipe” fees charged by the banks on purchase processed by plastic cards.
Praising the settlement for being merchant-friendly, the general counsel and senior vice-president for the National Small Business Association (NSBA), Mallory Duncan, acclaimed, “What we need are changes in the rules that bring about transparency and competition that would be here for years to come.”
National Retail Federation, America’s largest retail group, has claimed that the swipe fee costs had long been denting the earnings of retailers in the nation. After paying a massive amount of over $30bn to banks on account of credit card fees, the retailers used to end up with less-than-deserved earnings and profits.
But much to the delight of merchants, the settlement will give them the liberty of charging a small processing fee on payments made through credit cards.