KAZUHIRO NOGI/AFP/Getty Images
Sanford Weill, former Chairman and CEO of US financial giant Citigroup Inc., delivers a speech during a news conference on its anniversary of a century of operations in Japan, at a Tokyo hotel 20 March 2002.
For years, Visa, Mastercard, and other card-issuing banks have been charging fees to merchants for access to their payment networks.
Attorneys representing more than 7-million retailers, however, have argued that there has been no reasonable competition to keep the credit card swipe fees in check and were about to go to trial over the practice in September, until last week when banks agreed to a settlement. In addition to paying out $6 billion in damages, the banks will also reduce fees and even stop prohibiting retailers from imposing credit card surcharges onto customers.
Big box powerhouse Wal-Mart has expressed some doubts about the settlement and has called for retailers to reject it. Some economists predict the settlement will help smaller businesses, but no one knows yet exactly how this settlement will impact consumers and the general economy in the long run. One development that is clear about the settlement is that it marks a sizable loss for credit card companies in terms of profits and market control.
As the pending antitrust settlement goes forward, former Citigroup Chairman and CEO Sandy Weill has publicly called for all big banks to be broken up in order to prevent them from being ‘too big to fail.’
How significant is it to have a Wall Street insider like Weill declare big banks to be too big? Have credit card companies become too influential? How worried are you that retailers will pass the cost of using credit cards onto the individual consumer?
Heidi Moore, Wall Street correspondent and New York bureau chief, Marketplace
Eric Grover, Principal at Intrepid Ventures, a financial services consulting firm; he is an expert on card payment networks, payment processing, credit, debit and prepay payment businesses and the government's increasing role in the payments industry