US credit card giants Visa and Mastercard sued retailers that rejected a multibillion-dollar settlement over transaction fees and asked the court to rule the fee practices weren’t illegal.
The latest legal maneuver comes after years of legal battles over so-called “swipe” fees retailers must pay credit cards in each transaction.
Last year, in a proposed settlement, Visa, MasterCard and some banks that issue their cards agreed to pay more than $6 billion to millions of merchants that had sued them for allegedly fixing the card use fees.
But a number of retailers and trade groups — including behemoths such as Walmart, Target and Macy’s — have rejected the deal, saying it would not address the underlying concerns over how the fees are set.
On Friday, the credit card companies launched a counter-attack, asking US District Judge John Gleeson to rule that their fee practices didn’t violate antitrust law, according to the complaint filed in the US district court in Brooklyn.
Visa and MasterCard want to put an end to the legal morass that began back in 2005 with the settlement, which would amount to about $7.25 billion — $6.05 billion for past damages and the $1.2 billion for relief.
“We believe the settlement is a reasonable way to end seven years of negotiation. We remain confident that this settlement will be approved in the fall,” said Trish Wexler, spokeswoman for the Electronics Payment Coalition, which includes Visa.
But last week, another group of retailers rejected the July 2012 draft agreement. They have until May 28 to formally reject the agreement, said a spokesman for the National Retail Federation.
A final hearing is scheduled for September 12.
The NRF “opposes the settlement because it fails to reform the price-fixing system… or to introduce transparency that would lead to competition to lower the fees,” said spokesman Craig Shearman.
“Rather than lowering the fees, the card companies have proposed that the fees be passed along to consumers in the form of a surcharge, even though most major retailers have rejected surcharges.”
In addition, he argued that the settlement amounts, as shared among millions of retailers, would only amount to about three months worth of transaction fees, which the NRF argued is insufficient.
“Swipe” fees range from about 1.8 percent to 2.5 percent, Visa has said, and are worth about $40 billion annually, according to news reports.
[Image: “Stock Photo: Client Making Payment At Store’S Till With Credit Card” via Shutterstock]