Wal-Mart Stores Inc. and Target Corp. have vocally opposed the card networks' proposed multi-billion dollar interchange fee settlement, but even these giants may not have the influence to spike the agreement.

Visa and MasterCard, as part of a proposal to end the long-running litigation, offered a temporary reduction in interchange rates and a new permission to add a surcharge to card transactions. Some merchants immediately pushed back, and Wal-Mart today said the terms still "require merchants to broadly waive their rights."

The proposed settlement would be rejected if 25% of the nation's approximately 7 million merchants opt out, but lawyers close to the case said the settlement is still on track to be approved.

"I don't believe there is much chance that the settlement will not go through, even though certain merchants are making noise about it," K. Craig Wildfang, co-lead counsel for the plaintiffs, said in an interview. Wildfang, a partner at Minneapolis-based Robins, Kaplan, Miller & Ciresi L.L.P., has been directly involved in the case over the last seven years.

Wal-Mart was not among named plaintiffs in the case, Wildfang said. And while the nation's largest retailer may continue pushing for interchange reform through various legislative and other channels, "as far as legal settlements in federal court go, neither Wal-Mart nor Target has laid out an effective Plan B," he says.

Named plaintiffs in the settlement include Kroger Co., Walgreen Co., Safeway Inc., Rite Aid Corp., Publix Supermarkets Inc. and several others.

The proposed surcharge is impractical for most retailers, experts say.

"Outside of some convenience stores and gas stations, most merchants do not want to risk turning customers away by surcharging them for credit cards, and Wal-Mart is letting it be known that they are going to keep pushing for other ways to knock down interchange," Aaron McPherson, practice director with IDC Financial Insights, said in an interview.

It is also clear that the merchants care less about getting a one-time payout from the settlement and more about maintaining pressure to change interchange policies for good, McPherson says.

"Nobody seems to regard the money as significant, because the market priced in the cost of the settlement a long time ago," he says.

Wal-Mart, in its statement, reiterated its longtime complaint that the interchange market is "broken," and settling would force merchants to waive their rights to take further legal action against the card networks. The settlement would "also constrain emerging payments innovation," Wal-Mart said in its statement, but a company spokesperson declined to specify how.

Target last week expressed its displeasure with the settlement, joining the National Association of Convenience Stores in opposing the agreement.

Wal-Mart and Target's complaints about the settlement so far focus on the structure of interchange rates, which is outside the scope of action for a federal court in an antitrust case, Wildfang notes.

The Electronic Payments Coalition also stands firm in its belief that the settlement will ultimately be approved, Trish Wexler, a spokesperson for the Washington, D.C.-based group representing Visa Inc., MasterCard Inc. and dozens of major banks and state bankers' associations, said via e-mail.

Though Wal-Mart claims that the settlement would get in the way of payment innovation, "to the contrary, this settlement will remove the persistent distraction that the litigation presented, set out rules of the road going forward, and better able all participants in the electronic payments industry, including emerging companies, to refocus their investments, conduct research and development and innovate their products and services," Wexler says.

A MasterCard spokesperson declined to comment on Wal-Mart's complaints about the settlement.

"While we recognize some merchants may have different opinions, the settlement represents a solution reached after years of litigation and months of negotiation," MasterCard said in a July 24 statement. "The provisions of the settlement, including the flexibility for merchants to impose checkout fees, new negotiating tools for merchants and the scope of the release, was reached with the assistance of the court and was supported by the merchant class representing millions of large and small retailers, and prominent trade groups across the country."

Visa did not respond to an inquiry by deadline.

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