Scan Credit Card Firms for Antitrust – Editorial
The supermarket giants are taking on the credit-card giants in an antitrust lawsuit that could save money for every food shopper in America, whether you swipe plastic through those card-readers or use cash.
Kroger has joined Safeway and other chains in suing Visa U.S.A. Inc. for alleged price-fixing in setting the interchange fees that merchants pay card issuers for every transaction.
Credit-card officials claim merchants just want to shift their costs of doing business onto the backs of consumers, but we can’t help wondering why credit-card company transaction fees keep rising when the volume of those transactions has been swelling like a tsunami. If anything, as volume explodes, we would expect card companies could afford to knock down per-transaction fees. Higher fees are passed along to all shoppers – cash customers as well as card users – in the form of higher grocery prices. The courts should take a thorough look at the allegations to see if the industry practice rises to the level of antitrust violation.
This is the second round of lawsuits against the big credit-card companies. Last month, a group of small retailers, on behalf of all retailers, sued in federal court in Connecticut against Visa, MasterCard International and several large issuing banks. The lawsuit accuses them of setting “exorbitant” transaction fees. In lawsuits as well as other issues, size does matter. Wal-Mart, the world’s biggest retailer, in 2003 negotiated a multibillion-dollar settlement with both Visa and MasterCard.
Kroger and the other chains say they aren’t trying to kill transaction fees. They just want them to be determined by volume and other competitive market forces. They argue the ever-rising fees are harder to justify in this day when credit-card charges are processed electronically and almost instantaneously, and when annual transactions total a stupendous $1.7 trillion. Kroger says in the last five years, its credit and debit-card fees have jumped 215 percent and have been boosted 11 times. The chains insist they are not looking for a fat payoff in court. They just want to force Visa to moderate its fees. Let’s hope any savings won ultimately end up in supermarket shoppers’ pockets
Click here to view The Cincinnati Enquirer, July 18, 2005 editorial