Cha-Ching: Wal-Mart Sues Visa for $5B Over Card Swipe Fees
It’s been a busy week in the courts. Two banks filed a lawsuit against Target (NYSE:TGT) and its security auditor, Trustwave Holdings, on Monday; the next day, Wal-Mart Stores (NYSE:WMT), one of Target’s main competitors, sued Visa Inc. (NYSE:V) for $5 billion, alleging that the card network charges unreasonably high card swipe fees. The lawsuit this week comes months after a federal judge approved a class-action settlement between merchants and Visa and MasterCard (NYSE:MA).
According to reports from both Reuters and The Wall Street Journal, Wal-Mart’s suit, filed in the U.S. District Court for the Western District of Arkansas on Tuesday, reflects Wal-Mart’s freedom to fight security card networks that it now enjoys on account of it opting out of the aforementioned class-action settlement. Amazon.com (NASDAQ:AMZN) and Target also chose to stay out of the $5.7 billion settlement that a federal judge in Brooklyn approved in December, Reuters reports, and so they also retained the option of fighting for their own damages incurred.
This week, Wal-Mart filed a suit complaining that the excessively high card swipe fees Visa charges has caused its sales to suffer. According to Reuters, the court documents from Wal-Mart maintain that “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 for the artificially inflated interchange fees. As a result, Wal-Mart’s retail sales were below what they would have been otherwise.”