The world's largest retailer Walmart has sued credit card giant Visa for more than $5 billion for conspiring with banks to fix fees that merchants pay for accepting Visa card payments.
In the suit filed this week in Arkansas, where Walmart is based, the retailer said Visa worked with some of the largest U.S. banks "to illegally fix the interchange fees and inflate the network fees that Walmart and other merchants pay on Visa charge card transactions."
It said that Visa and the banks as well worked together to set rules that prevent retailers from protecting themselves against such fees.
Walmart said the banks agreed with Visa to establish one inflexible interchange rate regime, and suggested this prevents it from any ability to negotiate what would be a market rate.
"Visa has used its price-fixing schemes to establish, maintain and enhance its long-held market power," said Walmart in the suit.
The suit also accused Visa of issuing its cards with "inherently insecure" magnetic stripe technology, making it easy for thefts and fraud, and yet using its market power to shift the costs of fraud losses to merchants.
Walmart said that even though it is the country's largest merchant, it could not just refuse to accept Visa cards, because that "would result in an unacceptable decrease in sales."
Walmart said it had suffered "enormous damages" in excess of $5 billion between 2004 and 2012, the period covered in the suit.
[Image via Agence France-Presse]