WASHINGTON – Several more groups have joined opponents of the $7.2 billion settlement for Visa and MasterCard, adding new pressure to the historic deal.
Texas Food & Fuel Association, the Society of Independent Gasoline Marketers of America, and convenience store chains Thornton’s and Ricker Oil, all have announced their opposition to the deal, which must be approved by a federal judge. The National Association of Convenience Stores, National Cooperative Grocers Association, National Grocers Association, National Community Pharmacists Association, as well as retail giants Walmart and Target, previously said they will oppose the landmark antitrust settlement.
Meantime, the U.S. District Court for New York on Thursday said the parties in the case have until Oct. 19 to formally request approval of the settlement. Lawyers for the plaintiffs, which include merchants and retail industry associations, updated U.S. Magistrate Judge James Orenstein on the status of the case in the first court appearance since the settlement was unveiled last month.
The deal would settle civil antitrust charges alleging Visa and MasterCard violated provisions of the Sherman Antitrust Act by fixing interchange fees charged to merchants on credit card transactions.
The settlement will have enormous impacts on credit unions, which earn an estimated $3 billion a year in interchange fees on their credit cards and own stock in Visa and MasterCard. Credit unions also earn about $2 billion a year in fees on their debit cards. Lower interchange fees charged by Visa and MasterCard translate into less revenue for credit unions. In addition, credit unions and banks will fund the huge payment by Visa, which is converting a number of credit union- and bank-owned Class B Visa shares to fund its share of the settlement.
Under the terms of the settlement, Visa, which controls roughly two-thirds of the market, will pay $4.4 billion and MasterCard will pay $790 million. A dozen banks that dominate the two card networks will pay another $1.2 billion into the pot. The $7.2 billion will be spread among 7 million retailers.
Visa and MasterCard will pay merchants what will amount to a $1.2 billion rebate of interchange fees over the next eight months. But just as important, the two cards giants will no longer try to stop merchants from encouraging other forms of payment, such as cash or checks.
The growing opponents say the terms are not enough. “The relief proposed by the settlement ... fails to address significant issues regarding the relationship between merchants and credit-card companies,” said Jim Kolkhorst, chairman of the Texas Food & Fuel Association. “A one-time payment and temporary reduction in interchange rates cannot cure the fundamental inequities of the current system and provides no pathway for addressing these issues in the future.”
In particular, the group’s board said it was concerned about the settlement’s requirement that all future claims against Visa and MasterCard be waived by those accepting the settlement’s terms, as well as the absence of any “meaningful reforms” on the part of the credit card companies.