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Saturday, July 14, 2012

Visa and Mastercard: Settlement May Lead Some Consumers to Pay 'Swipe' Fees

MasterCard logo used on cards 1997 to present.
MasterCard logo used on cards 1997 to present. (Photo credit: Wikipedia)
Payment networks Visa and MasterCard, as well as a number of large retailers, have agreed to a $7.25 billion settlement that may allow merchants to impose a surcharge on consumers for credit card transactions and end a seven-year battle over credit card swipe fees.
Under the current system, merchants pay interchange, or swipe, fees to Visa or MasterCard that go to banks. The settlement may give merchants the right to recover the cost of the swipe fees from consumers.
Kroger, Safeway and Payless Shoe Source settled with Visa, MasterCard and more than a dozen large banks after U.S. retailers filed a class-action lawsuit in 2005. The settlement must be approved by the Eastern District Court of New York.
The settlement will allow greater transparency to consumers, attorneys for the merchants said, because merchants are now permitted to tell them that there are fees associated with credit card use and they are recouping a portion of it. Or, they could tell the customers that it is cheaper to pay cash.
“Although we have strong defenses to all claims, a settlement avoids years of litigation and uncertainties that are inherent in such cases,” said Noah Hanft, MasterCard’s general counsel and chief franchise integrity officer. “We believe that today’s settlements should resolve all issues with the merchant community.” ... Continue to read.
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