NRF To Fight Swipe Fee Settlement

“The proposal is a lose-lose-lose for merchants, consumers and competition,” says NRF CEO.

The National Retail Federation’s Board of Directors has authorized the Federation to go to court to block the proposed $7.25 billion settlement of a federal antitrust lawsuit over skyrocketing Visa and MasterCard credit card swipe fees that cost consumers hundreds of dollars a year.

“The National Retail Federation (NRF) categorically opposes the proposed settlement,” said NRF President and CEO Matthew Shay. “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.”

A resolution approved by the Board authorizes NRF to take steps, including “intervention in pending actions” in order to reach a solution “equitable to the broad merchant community.” NRF is exploring what form the legal action might take. NRF is not a party to the lawsuit, and U.S. District Court Judge John Gleeson has not yet fully outlined how outside groups will be allowed to intervene, or if the case qualifies as a class action.

Shay announced the Board’s decision at the Annual Summit being held in Denver by NRF’s division. While swipe fees affect all merchants, online retailers are particularly impacted because most of their sales are paid for by plastic and the “card not present” rates Visa and MasterCard charge for online transactions can be a third higher than those paid by other merchants.

Swipe fees are a hidden charge banks collect each time a Visa or MasterCard is swiped to pay for a purchase. Combined credit and debit card swipe fees tripled over the past decade to about $50 billion a year—driving up prices an estimated $427 for the average household—before debit swipe was capped by the Federal Reserve last year. Credit card swipe averages about 2% of each transaction, and amounts to about $30 billion a year, or $250 per household. Swipe fees are the second or third-highest expense for most retailers, behind employee salaries and health care benefits.

While other trade associations representing big box retailers, convenience stores and grocers have spoken out against the settlement, NRF is the only trade association representing the full range of merchants who could be included in a class action.

“A key question for the judge is whether this settlement is fair to the nation’s retailers,” Shay said. “From what we have heard, it unequivocally is not. NRF’s membership reflects the vast majority of retailers from Main Street small businesses to some of the nation’s best-known brands. Short of a company-by-company poll, a vote by the NRF Board is the clearest test of what merchants think.”

NRF is concerned by a number of provisions of the proposed settlement:

    • The $7.25 billion amounts to pennies on the dollar. If the case went to trial, a verdict in favor of retailers could result in a judgment totaling hundreds of billions of dollars given the eight-year time period of the case and rules allowing for antitrust damages to be tripled.

    • Nothing is done to block future increases in swipe fees. Without competitive restrictions, the card industry would quickly recoup the cost of the settlement from the very retailers who have been harmed, and increases that have averaged 16% a year over the past decade could continue indefinitely.

   •  Nothing is done to reform the anti-competitive, cartel-like system by which Visa and MasterCard each set fee schedules that all banks issuing their respective cards agree to follow. NRF has testified before Congress that the system is a violation of federal antitrust law.

• Nothing is done to require the card industry to disclose the fees on the cards or otherwise create the transparency needed to bring about competition to lower fees.

• A highly publicized provision allowing merchants to surcharge customers who pay by credit card is pointless because merchants are seeking to reduce prices for customers, not increase them. It also includes myriad restrictions that would make it difficult to surcharge even if someone wanted to. Visa and MasterCard have promised to recognize merchant bargaining groups, but no requirement is made for the card companies to negotiate in good faith.

NRF is particularly concerned by a provision barring all merchants—including those that do not yet exist—from ever again suing Visa and MasterCard over swipe fees.

“We represent the nation’s retailers and that means not just today’s retailers but tomorrow’s as well,” Shay said. “It is our duty to foster an environment that is supportive of young, new entrepreneurs who will create the Walmarts and Amazons and Main Street shops of the future. We can’t stand by and allow their rights to be stripped away before they’ve even had a chance to start their businesses.”

As the world’s largest retail trade association and the voice of retail worldwide, NRF represents retailers of all types and sizes, including chain restaurants and industry partners, from the U.S. and more than 45 countries abroad. Retailers operate more than 3.6 million U.S. establishments that support one in four U.S. jobs—42 million working Americans. Contributing $2.5 trillion to annual GDP, retail is a daily barometer for the nation’s economy. NRF’s Retail Means Jobs campaign emphasizes the economic importance of retail and encourages policymakers to support a Jobs, Innovation and Consumer Value Agenda aimed at boosting economic growth and job creation.




  1. Everybody is just talking no body is dock g anything. Just stop accepting cards. Let consumers pay by cash. Even government is with visa and MasterCard.

  2. This is too frustrating. No one wants to help retailers. And everyone wants small businesses to add jobs. At gas prices topping above $4 / gallon banks are going to make trillions in profits and yet they are saying they are struggling. This big giant corporations are robbing everyone and no law is doing anything. And if a small corporation would break one law they won’t let them sleep. That’s how I feel.

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