The National Retail Federation (NRF) has objected to a recent legal settlement between Visa, Mastercard, and merchants. NRF said that the settlement is insufficient to address long-standing grievances. According to a filing before the US Chief District Judge Margo Brodie, concerns linger over the fairness and lasting impact of the agreement despite the potential benefits of reduced fees.

NRF Challenges Visa and Mastercard

Recently, Visa and Mastercard announced a settlement to end a long-standing dispute between merchants and the card network giants. NRF perceives this settlement, which aims to address overcharges, as inadequate in providing relief to merchants. The dispute between merchants and Visa and Mastercard spans nearly two decades. It involves allegations of overcharging merchants during credit card transactions.

NRF termed the proposed settlement a "meager and temporary" relief for merchants. Visa and Mastercard had pledged to lower transaction fees and implement caps over a five-year period. However, the NRF contends that such measures fall short of addressing the financial burden borne by retailers.

"Financial relief offered by the settlement is meager and temporary. For example, the proposed settlement would reduce each Visa and Mastercard credit card interchange rate category by four basis points for three years, and reduce their overall average rates by seven basis points for five years," NRF wrote.

Additionally, the federation is concerned about the fairness of the settlement, particularly due to the absence of input from major retailers and their representative associations in the negotiation process. Besides financial considerations, NRF cited the lack of transparency and inadequate consultation with key stakeholders. The federation questioned the timing of the settlement, which followed recent legal developments favoring the merchants.

Decades of Legal Battles

NRF mentioned: "Additionally, the settlement agreement fails to take aim at a crucial category of fees. It temporarily reduces the fees that Visa and Mastercard fix on behalf of banks, the interchange fees, but not the network fees that are paid directly to Visa and Mastercard."

In addition to challenging the settlement, the NRF is engaging in broader advocacy efforts to improve credit card processing. The coalition, which includes the NRF, is lobbying Congress to pass legislation, such as the Credit Card Competition Act.

This bipartisan-backed bill seeks to enhance competition in the card network industry by mandating the availability of alternative processing options beyond Visa and Mastercard.