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Two separate organizations, the Small Business Survival Committee (SBSC) and the National Taxpayers Union (NTU), are expressing disappointment in the fact that a federal judge Tuesday refused to dismiss an antitrust case against MasterCard and Visa USA that has been brought by 4 million merchants, including Wal-Mart.

The retailers claim that Visa and MasterCard force them to accept their debit cards by requiring their acceptance as a condition for continued use of their credit card systems. The argument advanced by the retailers is that the debit cards issued by MasterCard and Visa have higher transaction fees, and therefore cost the retailer and the consumer more money. Jury selection should begin April 21.

John Berthoud, president of the 335,000-member NTU, said he believed the seven-year old antitrust case would "leave consumers paying a 'checkout tax.'"

“The retailers are now one step closer to getting what they've really wanted -- a court-imposed 'industrial policy' that means less competition, and less choice in payment options, all at the expense of American consumers,” Berthoud said in a prepared statement.

“Rather than deal with card companies through honest negotiations, Wal- Mart and its allies hope they can use the judicial system to cut their costs,” Berthoud observed. “That's not the right way to do business in a free-market economy.”

Karen Kerrigan, chairman of SBSC, said, "This decision is unfortunate for consumers and small businesses in the debit marketplace. If Wal-Mart and other giant retailers prevail in this suit, it will be a severe blow to the ability of small businesses to compete against the behemoths. Card companies like MasterCard and Visa help smaller merchants compete with larger retailers by leveling the playing field at the checkout counter. The big retailers are attempting to use the courts to assert more control over how consumers pay for their goods, and at the same time squeeze small businesses. This case is an attempt to dismantle consumer choice and uproot a payments system that consumers and small businesses have come to depend upon.”

She added, “Small businesses are benefiting from the consumer popularity with debit. Costs associated with processing debit products are less expensive than processing costs for most credit cards, paper checks and American Express. These are costs that directly come out of the bottom-line of many struggling small businesses. When consumers choose to use debit products, small businesses save money.”
KC's View:
We are, to be honest, confused.

First of all, there are four million retailers that are part of the antitrust suit against Visa and MasterCard. Are they all big retailers? We’re pretty sure they’re not. Sure, Wal-Mart is the highest profile retailer leading the charge against the charge companies…but that doesn’t mean that it is only big retailers involved.

Second, it has been our impression that the debit cards promoted by Visa and MasterCard are very different from the ATM/debit cards that many of us use. The latter, in fact, do have low transaction fees attached to them…but the whole reason that Visa and MasterCard push their versions is that they make them more money, not less, on higher transaction fees.

How leaving such a scam in place benefits either taxpayers or small businesses is beyond us. Though we’re willing to be enlightened…