On Tuesday, the National Restaurant Association (NRA) announced that it is joining retailers in opposing the proposed $7.2 billion antitrust settlement deal between Visa Inc. and MasterCard Inc., and a number of trade organizations which allege the credit card companies conspired with major banks to artificially inflate card swipe fees.
In a statement, NRA President and CEO Dawn Sweeney said, “There is strong concern that the proposed settlement agreement will not achieve the litigation’s most critical goal; to fundamentally change a broken marketplace in which swipe fees are set.”
The NRA is the sixth trade group to come out against the proposed deal over concerns about a provision that would prohibit all merchants form bringing future suits against the credit card companies, regardless of whether or not they opt in or out of the settlement agreement.
The NRA has been pushing for reforms that would reduce costs and increase the transparency of the transaction process for restaurants, and the decision to join the opposition to the settlement was unanimously approved by the NRA’s board of directors.
The settlement which was announced last July, requires approval by U.S. District Judge John Gleeson. The approval process is expected to last well into the middle of next year. If approved, the settlement will require banks and the credit card companies to pay $6 billion and to reduce card swipe fees for an eight month period. The reduction of interchange fees will save merchants an estimated $1.2 billion.
The settlement deal is being opposed by number of large merchants, including Wal-Mart Stores, Inc., Starbucks Corp. and Kroger Co., as well as the National Retail Federation (NRF). I a statement issued earlier this month by the NRF, the organization referred to the settlement as “a lose-lose-lose for merchants, consumers and competition” and said that approval of the deal would allow the credit card companies to increase card swipe fees at will in the future. Opponents also claim the proposed $7.2 billion compensation is too small compared with the billions of dollars collected each year by the credit card companies.
NRA Executive VP Scott DeFife says the proposed settlement is unfair to merchants who choose not to opt-in. In a recent interview, De Fife said, “If you’re going to opt in to the class, you can be bound by the terms. But, if you are not going to opt in to the class, you should not be.”
The Electronic Payments Coalition (EPC), which represents MasterCard and Visa, accuses the NRA and other opponents of trying to squeeze the credit card companies for more money. EPC Spokeswoman Trish Wexler said “Instead of accepting the benefits of the settlement, these groups want even more, and will clearly never be satisfied.”
Lisa Baertlein and Jessica Dye. “Restaurants oppose $7.2 billion credit-card fee settlement”. Reuters.com. http://www.reuters.com/article/2012/09/25/us-creditcards-settlement-restaurant-idUSBRE88O0KG20120925?type=smallBusinessNews. 9/25/2012.