The credit-card settlement proposed by the card industry to merchants is being opposed by many of the retailers. Though it was approved by a New York judge last week on Friday, the proposed settlement has still drawn criticism from the National Retail Federation, among other groups.
The card industry (credit card companies and banks issuing cards) have been accused by retailers of colluding to put interchange rates at artificially high levels. The retailers brought a suit against the players in the credit card industry seven years ago in 2005.
Many of the plaintiffs named in the suit declined to accept the interchange settlement on grounds that the credit card industry will continue taking advantage of the customers and retailers by imposing high interchange rates. In addition, they say that this will also block choice and competition. The National Grocers Association has also added its voice in the opposition to the proposed settlement.
The proposed settlement of $ 7.25 billion being offered to retailers to bring an end to the suit was offered in July this year. The settlement has a few supporters however, such as Cincinnati -based Kroger Company that felt that though it was not a perfect settlement but it was a good one. This, it said, was a chance for the merchants to resolve the lengthy dispute that has dragged on for a long time and would even set back the retailers further if they did not accept the settlement and other provisions set out in the agreement.
Groups that oppose the settlement say that the transparency that the plaintiffs were seeking from the card industry still would be lacking and that any future objections to the card industry practices would be silenced if they agreed on the settlement. The 2005 filing of the court case alleged that the banks and card issuers colluded and fixed fees paid by stores in order for them to accept debit and credit cards.