SEARS JOINS SUIT AGAINST VISA, MASTERCARD
Byline: Jennifer Owens
WASHINGTON — Sears, Roebuck & Co. said Monday that it has joined Wal-Mart and The Limited in an antitrust suit charging that Visa USA and MasterCard International violate antitrust laws by tying their debit cards to their traditional credit services.
In addition to the three big retailers, the National Retail Federation and the International Mass Retail Association announced last week that they were joining the suit, which seeks class action status. The deadline for additional plaintiffs was Monday.
“We believe with the rest of the retail industry that there should be a distinction between the two cards,” said a Sears spokeswoman. “I think it’s safe to say we’re in alignment with the rest on this one.”
Originally filed in October against Visa only, the suit charges that by tying its cards together, Visa has been able to charge higher fees for its debit cards despite lower costs and risks as compared to credit cards. The suit has since been joined by numerous small retailers and has expanded to include MasterCard as a defendant.
In a statement, NRF President Tracy Mullin said the lawsuit, which seeks an injunction and unspecified damages, speaks to retailers who want the freedom to chose which consumer payments to accept.
“It is appropriate for NRF to participate in the suit in order to preserve retailers’ rights to conduct business in the most cost-effective manner for themselves and for their customers,” Mullin said. “Visa and MasterCard are charging a ‘risk fee’ for what essentially is a risk-free transaction.”
According to the suit, Visa’s lowest interchange fees for a $100 transaction currently costs a retailer $1.25 if made with a Visa credit card or $1.10 if completed with a Visa Check debit card. Accepting an on-line ATM card costs a retailer about a nickel on a $100 purchase.
Visa has said, however, that allowing a merchant to pick and choose which cards to accept “would seriously undermine the entire premise on which the Visa system is built.”
Said Visa, “The Visa rule provides that if a merchant accepts Visa, he or she accepts all Visa cards. This, in turn, ensures that a cardholder is secure in the knowledge that his/her card will be accepted — regardless of which institution issued the card.”
According to the suit, Visa Check cards were used in about 556 million retail transactions in 1995 with a sales volume of $22 billion. For those transactions, the suit says, retailers paid at least $250 million. It added that retailers would have paid only $33 million had those transactions occurred with an on-line Automatic Teller Machine card.