U.S. District Court Judge John Gleeson last week approved a controversial $7.25 billion lawsuit over credit card interchange—or swipe—fees, drawing criticism from the retail industry.
“We are very disappointed that this deeply flawed settlement has been approved,” the National Retail Federation, the largest retail trade association in the world, said. “It is not supported by the retail industry and would do nothing to reduce swipe fees or keep them from rising in the future. The settlement permanently ties the hands of thousands of businesses who wanted nothing to do with this misguided case, and a decision to approve it violates established law and common sense. We are reviewing the ruling and will take whatever steps are necessary to protect the rights of merchants and safeguard the pocketbooks of their customers.”
The class-action lawsuit against Visa and MasterCard was originally filed by merchants in 2005. In July, Gleeson ruled that the 21-cent cap on debit card fees set by the Federal Reserve went beyond Congress’ intent. The NRF and a number of other retailers opted out of the settlement, saying it allows the credit card companies “carte blanche to set and manipulate interchange rates.”
Frank Keating, the president and CEO of the American Bankers Association, however, said the issue was settled in the “proper venue.”
“We are hopeful that today’s court-approved settlement marks the final chapter in what has always been nothing more than a legal battle between two industries over who should pay to support our nation’s incredibly efficient payment system,” Keating said. “ Only time will tell if this history will repeat itself, as retailers continue to show little regard for consumers and their payment preferences.”