“NACS does not accept this proposed settlement, and we reserve the right to fight it if other class representatives do accept it,” says Henry Armour, NACS president and CEO, on the proposed settlements between merchants and credit card companies.
NACS rejected the proposed settlement of antitrust litigation between merchants and the credit card industry.
NACS is a class plaintiff in the lawsuit. Because the proposed settlement does not introduce competition and transparency into the broken credit card wipe fee market, the NACS Board of Directors, comprised of more than 24 merchants, agreed to reject the proposed settlement agreement.
Tom Robinson, NACS chairman and president of Robinson Oil Corp., said the proposed settlement fails to offer competition and transparency in a clearly broken market, and he said it blocks swipe fees from market forces.
“This proposed settlement allows the card companies to continue to dictate the prices banks charge and the rules that constrain the market, including for emerging payment methods, particularly mobile payments,” Robinson said. “Consumers and merchants ultimately will pay more as a result of this agreement, without any relief in sight.”
The proposed settlement is the largest antitrust settlement in U.S. history, but 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. There are currently no fundamental market changes that would constrain Visa and MasterCard from continuing to raise rates to a point where the net effect is to make merchants pay for their own settlement.
Although the proposed settlement allows merchants to show consumers some fo the costs of accepting credit cards, it is under extremely limited circumstances with strict oversight by Visa and MasterCard. It also sets a rocky path for the future of the payments landscape. Visa and MasterCard will be able to use their power in the market to prevent new entrants such as PayPal from expanding their share of the market.
“There is plenty of time for merchants to make thoughtful decisions related to this proposed settlement,” said Henry Armour, NACS president and CEO. “We hope and expect that as they have time to review it, many other merchants including class representatives will decide to reject this proposal.”