Retailers have been frustrated with credit card fees for years, and their opting out of a recent settlement underscores this frustration. From Reuters:
A group of U.S. retailers, including Macy’s Inc. and Target Corp., sued Visa Inc. and MasterCard Inc. on Thursday, breaking off from a proposed $7.2 billion settlement reached last year over fees to process credit card transactions.
The legal team representing millions of merchants came to a settlement with Visa and MasterCard over their inflation of “swipe fees” – a settlement worth over $7.2 billion. This settlement required signing an agreement protecting Visa and MasterCard from future litigation for similar situations in the future. Several of the largest retailers involved in the suit have opted out, and are willing to forgo their share of the settlement due to the inability to take any future action.
Instead, they will be filing individual lawsuits accusing Visa and MasterCard of engaging in a conspiracy to fix interchange fees. This 8-year lawsuit has made it clear that Visa and MasterCard are willing to leverage their effective duopoly position to increase fees on retailers as much as possible. If only there were a payment system that wouldn’t allow this much leverage over its users…
Bitcoin has seen its rapid adoption accelerating over the last year, and the forgoing of this $7.2 billion settlement shows just how badly a frictionless transaction system is needed. Credit cards have proliferated as an interface to legacy payment systems since they significantly reduced the friction in payments compared to alternative methods like checks, wire transfers, and cash. Bitcoin is the next evolution of payment systems and removes the need for a middle-man as an interface. As bitcoin becomes more widely adopted, retailers will not have to worry about credit card companies squeezing their already thin margins. There’s a long road to bitcoin’s widespread adoption, but it appears Visa and MasterCard might be making the travel down that path a little easier.
Wow, Visa and MC are going to have a lot of their plate trying to deal with all these individual lawsuits now.
In South Africa we don’t have swiping fees.
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