Will credit card deal affect fees?
Even if it’s approved, shoppers are unlikely to notice any effects from a multibillion-dollar lawsuit settlement announced Friday between banks and retailers over credit card processing fees, experts say.
Visa, MasterCard and several major banks agreed to pay more than $7 billion to settle an antitrust case brought on behalf of 7 million retailers that accept Visa and MasterCard. The banks agreed to reduce for eight months the fees businesses pay credit card companies for card transactions they process.
Stores would be able to charge consumers more if they pay with credit cards, under changes to Visa and MasterCard rules in the settlement. But few, if any, stores are likely to do so, says Craig Wildfang, co-lead counsel for the plaintiffs. Retailers seldom slap fees on credit card purchases in countries that allow them to do so, he says.
It would be hard for stores to pass along their credit card processing fees to consumers anyway, as they often don’t know what they are until 30 days after a sale, says National Retail Federation general counsel Mallory Duncan.
That’s a big shortcoming of the settlement, he says. While the banks will pay $6 billion for their past fees and lower them for another eight months, “it’s a one-time bump back to the bad old world” of higher fees, Duncan says.
MasterCard general counsel Noah Hanft said Friday that “we have strong defenses to all claims” but settled to avoid years of litigation.
The settlement must be approved by a judge, who could accept, reject or ask the parties to renegotiate the deal. The National Association of Convenience Stores already says it opposes the deal. Duncan says he’s talked to several other retailers who will likely object.
If approved, whether the billions from the deal would be passed along to consumers is subject to debate, just as it’s still a big question if now-lower fees for debit card purchases have benefited shoppers. Retailers say the fee they’re charged now is still too high but insist stores are passing any savings that they have received along to consumers.
Says Wildfang, “I’m highly confident the benefits of this settlement will accrue to consumers.”