By Shelly Banjo
Wal-Mart Stores Inc. has sued Visa Inc. for more than $5
billion, claiming the card network charged unreasonably high fees
when the retailer's customers paid with plastic.
Retailers are charged fees set by Visa and other card networks
every time a customer pays with a credit or debit card. In its
suit, Wal-Mart alleges that the way Visa set those "swipe fees"
violated antitrust regulations and generated more than $350 billion
for card issuers over nine years, in part at the expense of the
retailer and its customers.
Visa declined to comment. The company has repeatedly denied that
its fees are anticompetitive.
The lawsuit, filed this week in the U.S. District Court for the
Western District of Arkansas, extends a long-running battle between
the retailer and the payments network. Wal-Mart helped win a $3
billion class-action settlement with Visa and MasterCard Inc. in
2003 over the card networks' requirement that merchants who
accepted their credit cards must also accept their debit cards.
Interchange fees, the industry term for card-swipe fees, have
been another major point of contention between the two camps. The
fees are set by Visa and other card networks and collected by
card-issuing banks like J.P. Morgan Chase & Co. Retailers have
argued that the fees had been set too high due to a lack of
competition with the two payment industry giants.
Smaller retailers settled over the issue in July 2012, but
dozens of large merchants including Wal-Mart, Target Corp. and
Macy's Inc. opted out so they could pursue suits of their
own--hence the suit filed this week.
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.
The settlement received final approval by a federal judge in
December, though several retailers have appealed. It is aimed at
ending more than 50 lawsuits filed against the card networks and
large banks that issue cards since 2005. Under the settlement,
merchants stand to receive about $5.7 billion.
Wal-Mart used the lawsuit filed this week to throw in a laundry
list of complaints against Visa, including claims that the high
fees imposed by the payment network caused the retailer to lose
sales.
"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."
Wal-Mart also took a shot against Visa over payment card
security. Data breaches last year at Target Corp., Neiman Marcus
and others have drawn attention to the country's slow adoption of
card technology that uses computer chips and PIN numbers and is
seen as less susceptible to fraud than the current system of
magnetic stripes.
"Wal-Mart was further harmed by anti-innovation conduct on the
part of Visa and the banks, such as perpetuating the use of
fraud-prone magnetic stripe system in the U.S. and the continued
use of signature authentication despite knowledge that PIN
authentication is more secure, a fact Visa has acknowledged
repeatedly," it said in the suit.
Visa and MasterCard have been pushing merchants and banks to
adopt the technology, arguing it could significantly reduce the
impact of data breaches. Both companies have set an October 2015
deadline for merchants to upgrade to the technology or face
increased liability for future data breaches.
Some banking groups have previously accused merchants of
dragging their feet on adopting the technology.
Andrew R. Johnson contributed to this article.
Write to Shelly Banjo at shelly.banjo@wsj.com
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