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BENTONVILLE, Ark. -- Mega-retailer Wal-Mart Stores Inc. has come out against the recently proposed credit card interchange fee settlement, saying it's "disappointed" in the offer. In doing so, Wal-Mart joins a growing number of consumer groups and merchants that include NACS, the Association for Convenience & Fuel Retailing; the Society of Independent Gasoline Marketers of America (SIGMA); and fellow mass-merchandiser Target Corp.
"The proposed settlement would not structurally change the broken market or prohibit credit card networks from continually increasing hidden swipe fees, which already cost consumers tens of billions of dollars each year," Wal-Mart explained. "The proposed settlement would require merchants to broadly waive their rights to take action against the credit card networks for detrimental conduct or acts. We believe the proposed settlement would also constrain emerging payments innovation."
The company urged other retailers to reject the settlement, saying that it would continue "to seek reform that will provide transparency and true competition among financial institutions."
The proposed $7.5-billion swipe fee settlement was reached in U.S. Federal Court in Brooklyn on July 13 and stems from a class-action suit dating back to 2005. The proposed settlement involves a payment to a class of stores of $6 billion from Visa Inc., MasterCard Inc. and more than a dozen of the country's largest banks that issue the companies' cards. The card companies have also agreed to reduce swipe fees by the equivalent of 10 basis points for eight months, for a total consideration to stores valued at about $1.2 billion, as CSNews Online previously reported.
The deal also calls for merchants to be allowed to negotiate collectively over the swipe fees. Additionally, merchants would be required to disclose information about card fees to customers, and credit card surcharges would be subject to a cap, according to the settlement papers. Surcharge rules would not affect the 10 states that currently prohibit that practice, which include California, New York and Texas.
An additional $525 million would be paid to stores suing individually, according to court documents.
Neither Wal-Mart, Target nor SIGMA were parties to the class-action lawsuit, as NACS was.