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NRA Continues Opposition to the Proposed Swipe Fee Settlement

The National Restaurant Association is reiterating its strenuous objection to a proposed settlement in ongoing litigation over credit card interchange swipe fees. In testimony for a U.S. District Court for the Eastern District of New York hearing, the Association said the proposed settlement does not protect restaurateurs – the majority of which are small businesses – from excessive, hidden and continuously increasing credit card swipe fees. The Association also noted that the proposed settlement could have detrimental impacts on a very tenuous emerging mobile payments market.
“The National Restaurant Association represents a diverse industry with hundreds of thousands of locations and millions of employees, and we strongly object to the proposed settlement agreement,” said Scott DeFife, Executive Vice President, Policy and Government Affairs, National Restaurant Association. “A settlement is supposed to resolve issues at the center of the dispute, and this proposal neither protects our members or consumers from excessive, hidden, and continuously increasing credit card swipe fees, nor changes card network practices. 
“America’s restaurants serve 130 million meals a day, in which credit cards are a predominant form of payment. Credit interchange is estimated at over 4 percent on average for the restaurant industry. With average profit margins of 3 to 5 percent, excessive and non-negotiable fees harm restaurants’ ability to grow and hire more people."
The Association joined the litigation in 2006 as a named class plaintiff in the suit filed in U.S. District Court in New York against MasterCard, Visa, and their member banks. Negotiations over the course of several years resulted in a proposed settlement agreement filed with the Court in July 2012. The National Restaurant Association has objected to the agreement, and is the only named plaintiff representing the restaurant and foodservice industry perspective, the second largest private sector employer in the United States. 
Over the past seven years, card companies have charged over $350 billion in swipe fees to businesses and consumers. The average restaurateur and other class merchants often have little transparency into the amount and types of fees charged.. Restaurateurs, as well as other class merchants, also have little, if any, ability to negotiate fees or terms of card acceptance. 
Liz Garner, the Association’s Director of Commerce and Entrepreneurship, added that the Association has significant concerns that if the proposed settlement is approved by the Court without changes, it could have debilitating impacts on the emerging mobile payments marketplace. 
“It is our view that plastic cards and mobile phones are fundamentally different payment products and should be treated as such,” Garner said. “We have concerns the proposed settlement will further solidify efforts by the major card networks to impose the current system on unwilling and uninterested merchants as we move to mobile platforms. That behavior will be detrimental to restaurants, customers and the economy as a whole, which is starved for some of the new innovative products coming to market.
The Association noted that if merchants' ability to challenge the card brands’ continuous anticompetitive behavior with litigation is constrained, it will be more important than ever that Congress and regulatory authorities continue to scrutinize and oversee the payments marketplace to ensure the free market for mobile payments can evolve and innovate, creating efficiencies for American consumers and the economy instead of allowing an old, dysfunctional system to simply shift to a new medium.
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