A settlement was recently proposed in a lawsuit against Visa, MasterCard and bank card issuers, which suggests that $6.5 billion be parceled out among plaintiffs in the class-action suit, plus another $1.2 billion to cover eight months of reduced merchant fees. Major retailers, small businesses and independent contractors who accused the card companies of price fixing when setting fees, filed the suit in 2005 and were tied up in litigation until mid-July, when the settlement was proposed. The Wall Street Journal reports that the majority of the settlement will go to larger retailers who contributed the most substantial percentage of swipe fees, and that small businesses speculate they will, “be lucky to get a couple hundred dollars each.”
Leaders from retail and small business organizations across the nation are weighing in with their thoughts on the settlement. Marilyn Landis, the 2011 chairman of the National Small Business Association, publicly recognized the settlement as a successful event, in hopes that banks would eventually opt to lower their fees for bank customers, including both business owners and shoppers. National Retail Federation (NRF) senior VP and general counsel for the plaintiff group, Mallory Duncan, told the Associated Press that retailers, “need changes in the rules that bring about transparency and competition that would be here for years to come.” The NRF reported that swipe fees cost stores around $30 billon annually, to card companies that work to fix these fees.
Visa and MasterCard previously prohibited stores from charging credit card users an additional fee, allowing them instead to offer discounts for paying in cash, as many gas and convenience stores are known to do. As a stipulation of the settlement, card companies will lessen their swipe fees for eight months, allowing for $1.2 billion in settlement money, in addition to the $6.5 billion to be distributed. Executives from Visa and MasterCard told the AP they believed the settlement was, “in the best interest of all parties.” Small business owners, however, are less hasty in celebrating the outcome.