“The ABA Board of Directors has determined that the proposed swipe fee settlement is not in the best interest of independent booksellers,” said ABA CEO Oren Teicher. “Because the proposed settlement is one-sided and preserves MasterCard and Visa’s anticompetitive practices, ABA is urging the class plaintiffs in the case to reject the proposed settlement. Ultimately, we believe that the adverse long-term effects of this settlement far outweigh any short-term monetary gain it might bring retailers.”
While $7.25 billion is the largest antitrust settlement in U.S. history, it amounts to less than two months’ worth of swipe fees, based on the estimated $50 billion in swipe fees collected by the credit card companies on an annual basis, as reported by NACS.
Among the reasons ABA objects to the proposed settlement is that it fails to introduce competition and transparency into the credit card swipe fee market. Under the settlement, Visa and MasterCard will be able to continue to fix prices for thousands of bank members. Furthermore, the settlement would not allow merchants to opt out of restrictive new rules set forth in the proposal and gives Visa/MasterCard the ability to keep market forces from working by keeping prices hidden. The settlement additionally limits innovations that could bring meaningful competition to the marketplace.
In a press release, NACS said it believes the “proposed settlement lacks any meaningful reforms that would introduce competition, transparency, and affordability into the credit card swipe fee market. The net result of a short-term apology in the form a small cash payout for the average merchant, is inadequate compensation for the proposed settlement agreement, which will lock in and protect a system that is harming NACS member stores and their student and parent customers through ever increasing swipe fees and arcane and unfair operating rules.”
RILA President Sandy Kennedy stated: “While Visa and MasterCard’s decision to pursue a settlement affirms the legitimacy of retailers’ claims, the flawed proposal upholds the networks’ anticompetitive practices and fails to provide retailers and their consumers with meaningful relief from tens of billions of dollars in hidden fees. We urge class plaintiffs to reject the proposal and send a clear message that a settlement that fails to engender competition and fix the broken electronic payments market is unacceptable.”
“The National Retail Federation categorically opposes the proposed settlement,” NRF President and CEO Matthew Shay said in a press statement. “It does nothing to curb the anticompetitive behavior of Visa and MasterCard, and instead ensures that swipe fees paid by retailers and their customers will continue to rise while barring any future legal challenges. The proposal is a lose-lose-lose for merchants, consumers and competition. NRF will take any and all steps necessary to oppose the settlement as it is currently proposed and will work toward real reform of the swipe fee system.”
Class plaintiffs who are in favor of the settlement are expected to ask the court for preliminary approval as early as October 12, at which point, merchants will have 30 days to write to the court to object to the proposed settlement. More information regarding how booksellers can make their views on the proposed settlement known to the court will be available soon in Bookselling This Week.