In a lawsuit filed late yesterday by
seven major grocery and drug store chain stores (Kroger,
Albertson’s Incorporated, Eckerd Corporation,
Maxi Drug, Inc., Walgreen Company, Ahold, USA. Inc.,
and Safeway, Inc.), Visa USA, Inc.
and Visa International Service Association
are being sued for price-fixing the interchange fees
charged to those merchants. In the lawsuit, the prosecution
claims that because of the high interchange fees,
consumers are paying more than they should be for
their groceries. The fees are set by Visa and the
banks that work with the merchants.
Just what are interchange fees? Every time that you
make a purchase with your credit card or debit card,
the retailer is charged a percentage of that sale
by the credit card companies. But we all know that
in the world of business, when a retailer incurs a
charge, it is usually passed on in some form to the
consumer, and in this case, the consumer pays more
for their food and drug supplies. In fact, experts
estimate that most average U.S. households pay an
average of $230 per year for hidden interchange
fees.
The claimants argue that in today’s world of
fast processing and approval, the interchange fees
should be going down, and not up. But the reality
has been just the opposite. Kroger and the other claimants
argue that Visa has raised their interchange fees
a total of eleven times in just a five year period.
Kroger alone expects to pay $350 million in interchange
fees this year, which is up about 215% from five years
ago. Unable to fight the quickly rising fees because
of what the claimants say are unfair regulations written
into their agreements with Visa, they have chosen
to fight it out in a court of law.
More and more of today’s consumers are choosing
credit cards and debit cards
when it comes time to pay for their goods, and in
fact, some of the suing chains say that a full 60%
of their sales are via this method.
We’ll watch this one closely, and who knows?
By this time next year, you may just find that your
grocery bill has decreased.
If you want to read the full lawsuit, you can get
a copy by logging on to Kroger’s web site at
http://www.kroger.com.
