RILA filing aims to smash Visa & Mastercard duopoly on swipe fees
The trade association for the US retail sector, the Retail Industry Leaders Association (RILA), has urged a federal court to reject the settlement that has been proposed in the ongoing case regarding credit card ‘swipe’ fee litigation.
The dispute revolves around the behavior of Visa and Mastercard regarding what retailers see as excessive costs every time a debit or credit card is used in their stores.
Even though Visa and Mastercard are separate corporate entities, they effectively represent a duopoly in this space, which opens them up to accusations of collusion and price-fixing.
The Payment Card Interchange Fee and Merchant Discount Antitrust Litigation in the US District Court for the Eastern District of New York is being challenged by the RILA despite several multi-dollar settlements being put on the table. They argue that it fails to fix the underlying market, in terms of the power of the aforementioned duopoly and lowering transaction costs.
“Rather than changing the fundamentals of this monopolistic market, the proposed settlement enshrines them,” RILA explained in its filing. “It locks in Visa’s and Mastercard’s dominant position and, via its release and waiver provisions, cuts off the legal rights of any other merchant or group to challenge the credit card cartel pricing model.”
Monica Welt, general counsel of RILA, had this to say: “Retailers have been seeking meaningful reform of the broken swipe fee system for decades. This settlement falls far short because it leaves the fundamental drivers of high fees in place while restricting merchants’ ability to pursue stronger solutions in the future.
“Retailers and consumers deserve a payments market that rewards competition, innovation, and lower costs, not one that preserves the monopolistic status quo.”
RILA has been joined in this filing by the National Retail Federation, while more than 1,000 other objectors filed similar documents with the court by the September 14 deadline, enumerating deficiencies and inadequacies of the proposed settlement.
The case continues.
