A comprehensive report at thestreet.com describes private antitrust litigation pitting some five million retailers against Visa, MasterCard and 13 large banks, including Bank of America and Citigroup. The plaintiffs, which include Payless ShoeSource, the National Association of Convenience Stores and the National Restaurant Association among many others, argue that the banks, Visa and MasterCard have illegally colluded to charge fees for credit card transactions that are far higher than an open, competitive market would dictate they should be.
The case could deliver a multi-billion dollar shock to the banking industry in coming months. According to Deutsche Bank research, a settlement or judge's ruling also could reduce the 2 percent "interchange" fees banks and card companies charge retailers on credit card transactions to as low as .5 percent.
The antitrust case follows a 1996 class action lawsuit led by Wal-Mart Stores and Limited Brands against Visa and MasterCard. That case led to lower interchange fees for debit cards but Visa and MasterCard increased credit card fees "to offset this decline and thus increased overall transaction costs for merchants," said Deutsche Bank analyst Bryan Keene in the report.
The current case is set for trial on September 12 and will be heard by Judge John Gleeson of the U.S. Eastern District, the same judge who approved the Wal-Mart settlement. Judge Gleeson's involvement "may play out favorably for the plaintiff," Keane writes in his report.
