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Grocer List Longer, Publix Joins Interchange Battle

Another major grocery store, Publix Super Markets Inc., has entered the interchange fray. On Oct. 4, 2005 the Florida-based supermarket chain that operates more than 800 grocery stores in the Southeast announced it filed a federal lawsuit against Visa U.S.A., MasterCard Inc. and their member banks. The suit claims that both parties are colluding to set rates that determine merchant fees for accepting plastic as payment.

"In a time when more than 60% of our customers prefer to pay by debit or credit card, it is astonishing that interchange rates continue to rise," a Publix spokeswoman said in a statement.

Four months earlier a group of major supermarket and drugstore chains including Albertson's Inc. and Safeway Inc. and led by The Kroger Co., corporate parent of Ralph's, filed a suit against Visa with similar allegations.

And less than two weeks before the Publix suit, four trade groups led by the National Association of Convenience Stores (NACS) and representing a combined 130,000 U.S. grocery store, convenience, drug and pharmacy merchants banded together to file their own class-action suit.

At least a dozen interchange-related cases are currently in courts around the country. On Sept. 29 a multidistrict litigation (MDL) hearing in Asheville, N.C. was held to determine further legal proceedings regarding the multitude of similar suits.

The court overseeing the MDL has not yet announced a decision; however, several plaintiffs' attorneys believe some of the cases will be combined. The card Associations and member banks argue that interchange supports a system that creates enormous value for merchants through increased sales, guaranteed payment, and faster, easier transactions.

Susan Molinari, a former U.S. Congresswoman and current Chair of Americans for Consumer Education and Competition, a group financially backed by Visa, called the lawsuits an attempt to shift retailer costs onto the backs of consumers.

"... Regulating the interchange fee will lead to higher annual fees, higher prices at check out and weaker rewards programs for consumers," she said.

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