ABA Welcomes Rejection of Proposed Swipe Fee Settlement

U.S. district judge Margo Brodie on June 25 rejected a class action settlement with Visa and Mastercard that would have reduced credit-card swipe fees. The American Booksellers Association, along with other organizations supporting independent local merchants, agreed with Brodie’s written order not to settle the antitrust case. 

The settlement proposed in March “was very good for Visa and Mastercard, but not for Main Street retailers like our independent bookstore members,” ABA director of advocacy and public policy David Grogan wrote in a statement. “We’re grateful that the judge made the correct call and recognized what a terrible deal this would have been for small retailers and consumers. We continue to stress that the only way to fix the broken payments market is for Congress to pass the Credit Card Competition Act,” sponsored by U.S. senator Dick Durbin (D-Ill.). 

Credit and debit card interchange fees average 2.26% of every transaction amount, and ABA called the fees "most merchants’ highest operating cost after labor..., driving up prices paid by the average family by over $1,100 a year." The settlement would have reduced these fees by four basis points (0.04%) for three years and required a lower average rate for five years, yet it allowed Visa and Mastercard to increase network fees, which opponents said would counteract any reduction in cost to retailers and consumers. Visa and Mastercard together control 80% of the market, and booksellers believe the settlement would have stifled network competition as well, failing to resolve the inflation of fees ongoing since 2010.