NRF asks judge to reject Swipe Fee Settlement

Rather than lowering the fees, the card companies have proposed that the fees be passed along to consumers in the form of a surcharge, even though most major retailers have rejected surcharges as the opposite of what they have sought during the years-long fight over swipe fees. Despite a few “illusory” changes in credit card rules, NRF said the settlement does nothing to lower the fees or to keep them from increasing in the future.

Retailers who do not opt out of the monetary portion of the settlement – and thereby become fully bound by the restrictions of the agreement – will be eligible for a share of $7.25 billion. But the figure amounts to less than three months’ worth of swipe fee charges, and the small retailers hit hardest by the fees could unwittingly give up their rights for as little as a few hundred dollars.

Rather than being brought by the retail industry as a whole or by a majority of major retailers, the suit was filed in 2005 by six trade associations and 13 retail companies, most of them individual stores or small chains.

The settlement was drafted without input from other retailers, and was ultimately rejected by a majority of the original plaintiffs, including all of the associations, when it was unveiled last summer. NRF, like most merchants, is not a party to the lawsuit, but has led the retail industry’s opposition to the settlement because NRF member companies would be dragged into its terms as part of the class action.

Averaging about 2 percent, swipe fees are a percentage of the transaction taken by banks each time consumers swipe a credit card to pay for a purchase, and total about $30 billion a year nationwide. Officially known as “interchange,” the fees have tripled over the past decade and drive prices up for the average household by more than $250 per year.

As the world’s largest retail trade association and the voice of retail worldwide, NRF represents retailers of all types and sizes, including chain restaurants and industry partners, from the United States and more than 45 countries abroad.

Retailers operate more than 3.6 million U.S. establishments that support one in four U.S. jobs – 42 million working Americans. Contributing $2.5 trillion to annual GDP, retail is a daily barometer for the nation’s economy.

National Retail Federation