Walmart and Target are joining convenience store operators and many consumers in opposing a proposed $6 billion settlement between credit companies, banks and retailers.
Under the settlement, which must still be approved by a judge, retailers, who will split the $6 billion settlement, will be allowed to charge customers more for paying with credit cards -- something the card issuers have long prohibited and consumers generally oppose.
"I will not stand for this and [will] just pay cash then or leave the store. Consumers have to stand up," said Nicole Swopes of Lake Forest, Ill., responding to a ConsumerAffairs story on the settlement. Seconding the sentiment was Steve Brienen, who said: "As Usual the real pain will be in the backside of the consumer no matter how this turns out. Using a credit card will cost us more one way or the other."
The retailers agree, or at least say they do.
"Walmart, along with a growing number of consumer groups and merchants, is disappointed in the proposed credit card interchange fee settlement," Walmart said in a statement. It said the settlement would not prohibit credit card networks from "continually increasing hidden swipe fees, which already cost consumers tens of billions of dollars each year."
Walmart said the settlement would also hamper payments innovation, such as paying for purchases with a smartphone or other device.
"As Walmart continues to seek reform that will provide transparency and true competition among financial institutions, we encourage all merchants to put consumers first and reject the settlement," the statement concluded.Â
Consumer spin
Target also put a consumer spin on its opposition.
"Target believes the proposed interchange fee settlement is bad for both retailers and consumers," the company said. "Target has no interest in surcharging guests who use credit and debit cards in order to allow VISA and MasterCard to continue charging unfair fees."
Retailers who brought the long-simmering suit have claimed the swipe fees of 2% or more charged by the card companies are a "hidden tax" on consumers and have long pressed for the ability to pass along the swipe fee to consumers who choose to pay with credit cards -- in effect giving a discount to customers who pay with cash.
But the National Association of Convenience Stores (NACS), a class plaintiff in the lawsuit, was quick to say it rejects the agreement.
"Not only does the proposed settlement fail to introduce competition and transparency into a clearly broken market, it actually provides Visa and MasterCard with the tools to continue to shield swipe fees from market forces," said Tom Robinson, chairman of the group.
According to the convenience store group, the 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, arguments later echoed by Walmart and Target.
How they voted
Yes
Yes