Walmart, retailers oppose Visa, Mastercard antitrust settlement

Walmart and several retail trade groups have asked a federal judge in Brooklyn to reject a proposed antitrust settlement with Visa and Mastercard, arguing it allows the companies to continue charging high fees for credit card transactions.

Walmart, the largest US retailer, said the settlement – negotiated by a group of small merchants – does not provide meaningful relief for large national chains and would require merchants to waive antitrust claims for eight years.

The proposed deal, announced in November, would reduce credit card “swipe” fees by 0.1 percentage point for five years, and follows two decades of litigation after a previous US$30 billion settlement was rejected.

The National Retail Federation and Retail Industry Leaders Association also objected, saying the reforms are insufficient and criticizing the US$206 million in legal fees for plaintiffs’ lawyers.

The case is being heard in the US District Court for the Eastern District of New York.

🔗 Source: Reuters

🧠 Food for thought

Implications, context, and why it matters.

Settlement trims swipe fees by 0.1 point over five years; average Visa/Mastercard rate ~2.35% in 2024, total $236 billion

U.S. credit and debit swipe fees (the per-transaction charges merchants pay when customers use cards) reached $236.4 billion in 2024, with Visa and Mastercard averaging about 2.35% 1.
The settlement would shave only 0.1 percentage point over five years, taking a 2.35% rate to roughly 2.25% even after fees quadrupled since 2009 2. Swipe fees rose 6.3% from 2023 to 2024, about twice U.S. inflation 1.
These charges rank behind labor as merchants’ top cost and add nearly $1,800 a year to prices for each U.S. family 1.
Cuts apply only to the issuing banks’ share of swipe fees (interchange), not the network fees charged by Visa/Mastercard, which limits impact 3.

Pay-by-bank players look set to benefit as merchants seek card fee relief

Account-to-account transfers can cost merchants two to four times less than cards, which makes them appealing given the thin relief 4.
Stripe, Rapyd, Flywire, and Adyen are rolling out pay-by-bank options to meet demand for lower-cost payments 5.
FedNow (the U.S. Federal Reserve’s instant payments service) and the Real-Time Payments (RTP) network run by The Clearing House are expanding use 5. Hundreds more banks plan account-to-account launches by late 2024. Pay-by-bank held 9% of U.S. e-commerce in 2022 and is forecast to grow at a 14% CAGR through 2026 5.