Publix calls fees unfair
The grocer is suing over interchange fees it must pay on credit and debit card sales.
By HELEN HUNTLEY
Published October 5, 2005
Publix Super Markets said Tuesday it is suing Visa and MasterCard over transaction fees, joining other retailers who claim the credit card companies and their affiliated banks are illegally restricting competition.
"In a time when more than 60 percent of our customers prefer to pay by debit or credit card, it is astonishing that interchange rates continue to rise," said Maria Brous, director of media relations for Publix. "As a result of Visa and MasterCard's business practices, there is no competition between banks and ultimately every consumer pays the price when these credit card companies and their member banks impose "hidden fees' on retailers."
At issue are "interchange fees" for processing credit and debit card transactions. The fees average $1.75 on a $100 purchase, although small retailers may pay as much as $2.90. Publix declined to reveal how much it pays.
The fees cost the average household $232 a year, according to information included in similar lawsuits against the card companies and various banks. Other big retailers, including Albertsons and Walgreen Co., have suits pending and just last week a suit was filed by four merchant associations representing convenience stores, grocers, chain drug stores and pharmacists.
Publix says the fees are illegal because retailers have no choice but to pay them to get a card transaction processed; there is no opportunity to negotiate lower rates.
Publix sued in the U.S. District Court for the Eastern District of New York. Several of the other suits were filed in New York. Most of the other suits ask to be treated as class actions, but Publix's suit does not.
"Visa remains confident in its ability to defend interchange, a practice that not only provides a fair mechanism for fueling growth and sharing system costs, but has been upheld as legal in federal court," Visa vice president Paul Cohen said in a statement.
Visa said its system "creates enormous value for merchants, through increased sales, guaranteed payment, and faster, easier transactions."
A MasterCard spokesman could not be reached for comment.
Helen Huntley can be reached at firstname.lastname@example.org or 727 893-8230.
[Last modified October 5, 2005, 01:14:17]
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