Global titan Wal-Mart Stores, Inc. filed a $5 Billion suit against worldwide colossus Visa, Inc. in U.S. District Court for the Western District of Arkansas on March 25, 2014. Claiming the credit/debit card business charges excessive card swipe fees, Wal-Mart opted out of a December 2013 class action settlement between Visa, MasterCard and thousands of merchants. Many merchants complained that the $5.7 Billion settlement was inadequate and the litigation release too broadly restricted their right to sue Visa or MasterCard in the future; consequently, several major players, including Wal-Mart, Inc., chose to pursue damages in their own cases.
Visa/MasterCard charge retailers “card swipe fees” every time a purchaser pays with their debit/credit cards. According to Wal-Mart, these card swipe fees and the “anticompetitive” collusion of Visa and banks amount to antitrust violations including but not limited to price-fixing, from January 1, 2004 to November 27, 2012. Wal-Mart maintains that these alleged violations forced it to raise prices and/or reduce retail services to offset the charges.
Somebody bullied Wal-Mart? The irony of Wal-Mart’s claim is not lost on suppliers, customers and competing retailers. “Being Wal-Marted” is a popular term for the consequences of dealing with arguably the largest, most powerful, most ambitious retailer on the planet: Wal-Mart is the most profitable customer for many suppliers, yet the traffic brought by name-brand supplies is encouraged to buy cheaper Wal-Mart goods, driving down the price of products; customers may pay lower prices at Wal-Mart but often endure mediocre-to-unpleasant shopping experiences with scarce and sometimes less-than-knowledgeable sales assistance; as Wal-Mart moves into more and more sales categories, many competing retailers are simply crushed by Wal-Mart’s strong cost position. Unfortunately for Wal-Mart, Visa is no supplier, customer or retailer; rather, Visa is arguably the global leader in payment technologies linking banks, merchants and governments worldwide. What is more, if Wal-Mart’s claims are true, Visa “tag-teamed” with financial institutions to unfairly generate $350+ Billion for debit/credit card issuers through card swipe fees. Given the size and power of these two behemoths, this case is tantamount to “King Kong vs. Godzilla 2.”
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