Credit card transaction fees source of concern for retailersRetailers across the country have opposed credit card swipe fees that take the money that could otherwise work toward their bottom lines. A class-action lawsuit between merchants and Visa, Mastercard and many banks has highlighted the concerns these businesses face as they attempt to change the "swipe fee" policies.

Lawsuit questions swipe fees
An antitrust lawsuit filed in 2005 alleged that companies such as Visa and Mastercard set up the card transaction fees with big banks to charge merchants a small fee each time a customer swipes a credit card. Retailers claim this fee forces them to raise their prices to cover the cost of the transaction fee, and ultimately hurts their businesses.

According to NBC, a proposed settlement to the lawsuit would require Visa, Mastercard and the large banks involved in the scheme to pay about $6 billion to the millions of retailers represented in the suit. It would also lower the swipe fees U.S. merchants pay for eight months, which is estimated to cost the credit card companies an additional $1.2 billion. Merchants would also be able to charge Visa and Mastercard users a "checkout fee" to regain the swipe fee where permitted by law. However, it's uncertain that many merchants would even charge this fee because they would risk alienating customers with the additional expense.

Settlement dispute may take more time
However, The New York Times revealed that the settlement may be facing opposition from the majority of the merchants represented in the suit. Many came out voicing concerns that the deal fails to address the serious issue properly and would make it impossible for retailers to charge the checkout fee if they desired.

"The current payments system is so convoluted," said Dawn Sweeney, the National Restaurant Association's president and chief executive, according to The New York Times. "The average restaurateur has no idea exactly what they are paying and why they are paying large amounts to accept credit and debit cards, which are necessary in today's marketplace. The proposed settlement does not address those issues. And after digging into the details of the proposed agreement, we have serious concerns that rather than correct those fundamental flaws, it cements those flaws for decades to come."

At this point, The New York Times reported that 10 of the 19 plaintiffs oppose the settlement the lawyers have negotiated. When a deal is reached, it may very well change how credit card transaction fees are handled and alter the way retailers price their goods and conduct business with consumers.
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  1. I hope the merchant groups and the credit card companies come to so sort of agreement. This has been going on for quite some time.