Walmart Rejects Interchange Settlement 

July 26, 2012

Like one of its biggest competitors, the largest retailing force in the world has publicly expressed its opposition to the proposed $7.25 billion settlement of a 2005 class-action suit regarding interchange fees. Walmart issued a statement Tuesday—echoing Target’s from last week —saying the proposal would not “structurally change” the “broken” interchange system and urging merchants to reject the deal.

“Walmart, along with a growing number of consumer groups and merchants, is disappointed in the proposed credit card interchange fee settlement,” the statement said. “The proposed settlement would not structurally change the broken market or prohibit credit card networks from continually increasing hidden swipe fees, which already cost consumers tens of billions of dollars each year. The proposed settlement would require merchants to broadly waive their rights to take action against the credit card networks for detrimental conduct or acts.”

A group representing the interests of the card networks and issuing banks characterizes Walmart’s opposition to the settlement as a rift between the largest and smaller businesses and says Target and Walmart do not represent the views of the bulk of U.S. merchants.

“These mega retailers are at absolute odds with the millions of other merchants represented in the class who agree that the settlement is in the best interests of all merchants—large and small,” Trish Wexler, spokesperson for the Electronic Payments Coalition, tells CardNotPresent.com.   “Walmart and Target may feel the settlement is not enough for Walmart and Target.   But it’s no surprise that these giant retailers’ interests are not in line with the millions of other U.S. merchants who think this is a very fair deal.”

Not surprisingly, merchant groups do not agree. Mark Horwedel, CEO of the Minneapolis-based Merchant Advisory Group, says opposition to the proposal by merchants of every stripe is growing.

“In addition to our members that have gone public with their views (Walmart and Target against and Kroger, the largest supermarket chain in the U.S., for the proposal), I’ve had many private discussions and I’d tell you there are more who are opposed to the settlement than in favor,” says Horwedel. “I think all merchants complain about the cost of card acceptance, with few exceptions. I don’t see anything divisive here between large and small merchants on this.”

Understandably, Horwedel says, some merchants that have been sideswiped by a lousy economic   environment and would benefit from the cash settlement are for the proposal. Most, however, are taking a longer view, he says. Whether that will be enough to sway the presiding judge is unclear.

“Target and Walmart were not named as litigants in this case. But, they’re part of the class and they’re going to get a chance to weigh in,” Horwedel notes. “I don’t know how that’s going to add up when people have an opportunity to let the judge know what they’re thinking. I don’t know where the scales will tip. But, from what I’m hearing right now, it sounds like there are relatively more merchants opposed to this than in favor of it.”