Walmart has sued Visa for $5 billion, alleging the credit card company worked with banks to charge excessive card swipe fees.
In a real life clash of the titans, Walmart is suing Visa, claiming the card company conspired with banks to fix prices on the transaction fees retailers pay Visa.
The world’s largest retailer is asking for $5 billion in damages from the alleged price fixing and other antitrust violations.
According to The Wall Street Journal, Walmart claims that excessively high transaction fees have generated more than $350 billion for card issuers over the period from 2004 to 2012, at the expense of merchants and customers.
“The anticompetitive conduct of Visa and the banks forced Wal-Mart to raise retail prices paid by its customers and/or reduce retail services provided to its customers as a means of offsetting some of the artificially inflated interchange fees,” the company said. “As a result, Wal-Mart’s retail sales were below what they would have been otherwise.”
Will consumers benefit from this lawsuit? Potentially.
If the lawsuit ends in Walmart’s favor, then swipe fees for retailers could go down – savings that could be passed on to customers at checkout. But don’t expect to see those savings anytime soon.
ECreditDaily.com said, “Any savings for the public is far off on the horizon as these corporate giants spend millions in legal fees over a protracted period of time.”
Worst-case scenario: Walmart could drop its acceptance of Visa, but that would come at a heavy price, said eCreditDaily.com. The retail giant would risk driving away customers with Visa cards.
Bloomberg said this is the latest in a legal fight between retailers and card companies that has gone on for more than eight years. Retailers have contended that a lack of competition with industry giants Visa and MasterCard has enabled card swipe fees — about 2 percent of each purchase — to be set at unreasonably high levels. Walmart was one of dozens of merchants, including Target and Amazon, that bowed out of a class-action settlement between retailers and the two major card companies several months ago, in order to pursue their own lawsuits against the card companies.
Companies that opted out of the settlement have argued that the deal wouldn’t prohibit card networks from raising card-processing fees later on and would require merchants to waive their rights to sue payment networks on all current or future payment methods, ranging from credit cards to mobile phones.
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