MADISON, Wis. (5/23/13)--A group of 19 retailers, including Wal-Mart Stores, Starbuck Corp. and Costco Wholesale Corp., are opting out of a $7.25 billion antitrust settlement with credit card titans Visa Inc. and MasterCard Inc. over fees that merchants are charged to process credit card transactions.
The merchants say the reason for not accepting the proposed settlement reached last summer is that it would not stop swipe fees from rising. Also, it maintains and bolsters an anticompetitive system that permits Visa and MasterCard to fix fees, they said (The Wall Street Journal and Bloomberg.com May 21).
Furthermore, the group said the deal would prevent them from taking legal action in the future against credit card networks for any alleged anticompetitive behavior, acording to the Journal.
If the proposed settlement were approved, large banks and credit card companies would be given license "to perpetuate an unfair and broken system that costs all consumers," Mike Cook, senior vice president of finance and an assistant treasurer for Wal-Mart said Tuesday. Those costs would also impact consumers who don't own a credit or debit card, he added.
Other companies in the retail group that are opting out include: Alon Brands Inc., Gap Inc., Lowes Cos., Nike Inc. and 7-Eleven Inc., the Journal said.
The National Retail Federation, a trade group based in Washington, D.C., separately said Tuesday it intends to object and opt out of the proposed settlement. The deadline to object and opt out is next week, the Journal said.
Although credit unions are not involved in the proposed antitrust settlement, they--along with other financial institutions--would be impacted by terms of the $7.5 billion settlement, which would necessitate a reduced interchange rate fee (IRF) of 10 basis points for an eight-month period (News Now Nov. 1).
Credit unions with credit card programs would lose roughly $50 million in total revenues--or about 0.5 basis points on their total assets--if the total IRF reduction is $1.2 billion, the Credit Union National Association said. That loss would mostly be absorbed by a relatively small number of credit unions with very active credit card programs, CUNA added.