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Major Retailers Opt Out of Visa and MasterCard Settlement

By Ron Mazursky
November 21, 2013
in Analysts Coverage
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Nineteen major retailers, including Wal-Mart, Starbucks, and Costco, have chosen to opt out of the proposed antitrust settlement with Visa and MasterCard, signaling a significant divide in how merchants view the agreement. By walking away from their share of the $7.25 billion settlement, these companies are betting they can secure better outcomes on their own. The move underscores ongoing frustration among large retailers over card network practices and raises questions about the long-term impact of the deal. While the opt-outs are not expected to derail the settlement entirely, they highlight the tension between merchants and payment networks that continues to shape the industry.

Nineteen major retailers are exercising their options to opt out of the proposed antitrust settlement with Visa and MasterCard. Included in this decision to opt-out are Wal-Mart, Starbucks, Gap Inc., Lowe’s , Costco Wholesale Corp., and Nike. Merchants opting out are giving up their share of the proposed $7.25 billion settlement and are signaling their belief they can obtain higher individual rewards.

From Bloomberg:

K. Craig Wildfang, an attorney for plaintiffs in the case, said the announcement by Wal-Mart and others wasn’t surprising.

“These merchants have been publicly critical of the settlement, and we always thought that many of them were likely to opt out,” said Wildfang, of Robins, Kaplan, Miller & Ciresi LLP. “We remain confident that the vast majority of merchants in the class will not opt out.”

The National Retail Federation said today it will formally oppose the settlement because it gives the card companies “legal blessing to continue their abuse of merchants and consumers indefinitely.”

Most observers do not feel these opt-outs are likely to derail the overall settlement, as these merchants do not collectively represent 25% or more of Visa/MasterCard volume. A hearing on final approval of the settlement is currently scheduled for September 12.

Click here to read more from Bloomberg. Click here to visit the Credit Strategy Session.

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