Retailers drag Visa USA to court over interchange fees |
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Published
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Mon, 18 Jul 2005 01:35
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NEW YORK: A group of supermarket and drugstore chains in the United States have dragged Visa International and its Visa USA unit to court alleging that the company uses its monopoly over the market to charge artificially inflated fees.
The price-fixing lawsuit was filed in the Federal District Court in Manhattan on Thursday. The retailers say that the credit card association abuses its market monopoly in order to boost its revenues illegally. A similar case had been brought against Visa and MasterCard last month. That suit was file by small and medium-sized businesses and had named the Bank of America, Citigroup and J. P. Morgan Chase as well.
Thursday's lawsuit sees Kroger, Albertson's, Safeway, Ahold U.S.A., Walgreen, Maxi Drug and Eckerd renewing the fight against the world's premier credit card agency. When asked why his clients had not named MasterCard, Richard Alan Arnold, a lawyer representing the retailers said that "Visa was the banner company in this industry and we wanted to address the problem with them first. It doesn't foreclose any other options. We're unable to resist those increased fees because of the way the system is set up." The suit also alleges that Visa was colluding with its member banks "to fix interchange fees and to adopt and enforce rules and regulations designed to prevent market forces from lowering those fees."
San Francisco-based Visa responded to this lawsuit by saying; "It appears this is another in a series of attempts by some merchants to receive all the value of electronic payments, while shifting their normal costs of doing business onto consumers." The statement referred to the fact that Visa strictly forbids merchants from charging transaction fees on credit/debit cards.
However, Visa charges the same fees to the merchant, who more often than not passes it down to the consumer by charging higher rates.
"Some merchants are now asking the courts to determine rates through price controls. Yet experience shows that the marketplace -- not a courthouse -- is the best determinant of price. Ultimately, price controls are bad for consumers, bad for merchants and bad for the economy," Visa added.
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