A U.S. federal judge on Friday approved a $5.7 billion class action settlement between retailers and Visa and MasterCard over fees merchants are charged each time a customer swipes a credit or debit card. Thousands of retailers are objecting to the decision, which they claim does not prevent the credit card giants from imposing higher fees with impunity.
Swipe, or interchange, fees are set by Visa and MasterCard and paid by retailers when consumers use credit or debit cards. Credit card swipe fees cost merchants and their customers an estimated $30 billion a year and have tripled over the past decade.
A group of 19 merchants and trade groups sued Visa and MasterCard in 2005, alleging they conspired to fix fees charged to stores for handling credit card payments. A settlement was reached last year but some retailers, including Target (NYSE:TGT) and Macy's (NYSE: M), rejected it, in part because of a provision that barred future lawsuits. The value of the settlement reached last year decreased to $5.7 billion from roughly $7.2 billion after thousands of merchants opted out of the deal. U.S. District Judge John Gleeson dismissed objections made by the remaining merchants by approving the settlement on Friday.
The National Retail Federation issued a statement noting its disappointment with the settlement, which it is considering appealing with the support of several retail organizations.
"We are very disappointed that this deeply flawed settlement has been approved," Mallory Duncan, general counsel at the National Retail Federation, said in a statement. "It is not supported by the retail industry and would do nothing to reduce swipe fees or keep them from rising in the future.
"The settlement permanently ties the hands of thousands of businesses who wanted nothing to do with this misguided case, and a decision to approve it violates established law and common sense. We are reviewing the ruling and will take whatever steps are necessary to protect the rights of merchants and safeguard the pocketbooks of their customers."
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