NRF Cheers Overturn Of Swipe Fee Settlement

Share on linkedin
Share on twitter
Share on facebook
Share on reddit
Share on email

A $7.25 billion settlement over the credit card interchange (or “swipe”) fees charged by MasterCard and Visa has been rejected and sent back to a lower court by the U.S. Court of Appeals for the 2nd Circuit in New York. The National Retail Federation (NRF) is considering the June 30 decision a victory for its retail constituents.

“This ‘settlement’ was never a settlement on behalf of the retail industry but rather a backroom deal that failed to represent the interests of retailers,” said NRF SVP and General Counsel Mallory Duncan in a statement. “It would have given merchants pennies on the dollar for the price-fixing they have suffered at the hands of the big credit card companies and would have done nothing to end price-fixing or to lower swipe fees going forward.”

Duncan added that the impact reaches beyond retailers to their customers: “These fees drive up the price of retail merchandise, costing the average family hundreds of dollars a year in added expenses.”


NRF has been working for the last two years to overturn the December 2013 settlement of a class action lawsuit. The suit, originally brought in 2005 by 19 retailers and trade associations, alleged that credit card providers had schemed to fix the price of their processing fees.

In the settlement approved by U.S. District Court Judge John Gleeson, Visa and MasterCard proposed that retailers pass along swipe fees as a surcharge, an idea that major retailers rejected. The NRF’s 2014 appeal noted that 19% of merchants by card volume had formally objected to the settlement, and that 25% had opted out. Small retailers would have seen as little as a few hundred dollars under the decision, and merchants gave up their right to sue in the future regardless of whether they received a piece of the settlement money or not.

In overturning the settlement, the Appeals Court said that merchants had been inadequately represented at the time the settlement was reached, noting that both groups should not have been represented by the same lawyer. According to the New York Times, “Class counsel stood to gain enormously if they got the deal done,” the court said in one of the opinions from the three-judge panel.

Swipe fees average about 2% of each transaction; at the time of the settlement, they amounted to approximately $30 billion per year.



Access The Media Kit


Access Our Editorial Calendar

If you are downloading this on behalf of a client, please provide the company name and website information below: