Antitrust Lawsuit Against Visa and MasterCard Applauded by NRF
Antitrust Lawsuit Against Visa and MasterCard Applauded by NRF
The National Retail Federation (NRF) on Wednesday voiced their approval of a U.S. District Court decision to proceed to trial with an antitrust case brought by more than five million large and small U.S. merchants against Visa and MasterCard. The case questions the companies' practices of charging higher fees when customers make the voluntary decision to sign for their debit card transaction vs. punching in their PIN code.
Under the current system, merchants pay a flat fee of about 12 cents when a customer uses a PIN on a debit card transaction, but are forced by Visa and MasterCard to pay a percentage of the sale -- usually between 1.5 and 2 percent -- when the customer signs a sales slip instead.
"The problem is that Visa and MasterCard have gotten greedy and are trying to train consumers to sign because they make more money that way", said NRF president and ceo Tracy Mullin. "We think that's wrong. It artificially inflates the price of almost every product sold and lets Visa and MasterCard rake in huge profits at the expense of hard-working American consumers." The NRF press release went on to say that "the higher fees for signature transactions drive up the costs of goods and services for all consumers and generate more than $6 billion per year in excess profits for Visa, MasterCard and their member banks".
The case is set to go to trial on April 28, 2003.
Moderator's Comment: Are the debit card companies justified in setting these higher fees? Do they need to be?
Times are tough for credit card companies, and they've apparently gotten pretty creative in coming up with new fee structures. For mom and pop retailers living on the slimmest of margins, an extra percentage point here and there has tangible effects on take home pay. And yet, paying points on credit card purchases is a cost of doing business. Can someone explain to me why the same fees are considered unfair when it comes to debit card transactions? [Rick Moss - Moderator]