Wal-Mart Stores Inc., which made a name for itself in the payments industry almost two decades ago when it led a class-action lawsuit challenging the “honor-all-cards” and debit card interchange policies of Visa and MasterCard, is at it again.
The mega-retailer this week filed a lawsuit against Visa, alleging it “engaged in a conspiracy with some of the nation’s largest banks” to fix fees charged during credit card transactions.
The lawsuit is an expected opt out to class-action litigation filed earlier in which many other merchants in 2012 agreed to settle claims against the card brands. In that case, Visa and MasterCard agreed to pay $7.25 billion in settlement fees to all the merchants who sued. However, the settlement is under appeal, and some 8,000 merchants have opted out of the litigation. As a result, the settlement total has dropped.
Other large merchants, including Target and Macy’s, opted out of the settlement earlier and filed their own antitrust suits. Until this week, Walmart had yet to do so. Walmart is seeking $5 billion in damages, which if its suit is successful, automatically would triple under antitrust rules.
Visa would not comment on the litigation, a spokesperson told PYMNTS.com.
In a statement, Walmart said it continues to oppose the proposed credit card interchange-fee settlement. “If the settlement is approved, merchants would be broadly deprived of their rights to take action against the credit card networks for future damaging acts. Innovation around new payment technologies stands to be stifled, and consumers would face continually increasing hidden swipe fees, which already cost them tens of billions of dollars each year.”
Walmart’s suit, filed March 25 in U.S. District Court for the Western District of Arkansas, alleges Visa violated antitrust laws by engaging “in a conspiracy with some of the nation’s largest banks to illegally fix the interchange fees and inflate the network fees that Walmart and other merchants pay on Visa charge card transactions.”
Visa caused Wal-Mart “enormous damages” between Jan. 1, 2004, and Nov. 27, 2012, according to the lawsuit, which alleges retailers and consumers nationwide paid approximately $350 billion in fraudulent fees. As a result, many merchants were forced to pass on some of these artificially high fees to consumers, the retailer said in its statement.
Wal-Mart also claims it is being harmed by Visa’s and banks’ “anti-innovation” conduct by supporting mag-stripe cards and requiring only signatures for authentication.
David Evans, Chairman of the Global Economics Group, believes Walmart and the other merchants that opted out of the settlement didn't get the hint from Judge Gleeson, who is overseeing the original credit card case. “As directly as [Gleason] could say in the context of a settlement decision, he told the merchants that their antitrust lawsuit on interchange fees was a dud – take the money, folks, and be happy."
Quite obviously, those that opted out think they have a shot at winning and killing interchange fees for good, not to mention billions in trebled antitrust damages.
So, despite the settlement, the interchange-fee wars will likely rage the rest of this decade.
Read the full filing the the United States District Court for the Western District of Arkansas here.