The Wall Street Journal reports this morning that it cost MasterCard about $1 billion to settle the antitrust lawsuit over debit card fees, though it is not immediately known whether the money will be paid completely in cash.
MasterCard spokeswoman Sharon Gamsin has declined to comment on the settlement.
The judge in the case has barred the parties involved from discussing the settlement specifics.
The deal between MasterCard and some four million retailers was announced just as jury selection was about to get underway in a trial that has taken some seven years to get to this point. Wal-Mart, Sears, and millions of other retailers charge that the “honor all cards” policy held by 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 debit cards issued by MasterCard and Visa have higher transaction fees, and therefore, the retailers say, they cost both the retailer and the consumer more money.
Potential damages in the case have been estimated to be as much as $39 billion.
Now, however, Visa stands alone in defense of the debit card policies, and says that it does not plan to settle.
Visa Vice President Daniel Tarman said today in a statement: "Visa is focused on demonstrating at trial that our practices are legal, appropriate and in the best interest of consumers,” and that "Visa will continue our efforts to preserve a payments system that serves Member financial institutions and merchants, and that delivers to consumers a vast array of choices of how to pay for goods and services."
Lloyd Constantine, a New York lawyer representing Wal-Mart and the other retailers, said, "Visa and MasterCard refused to play by the rules of fair competition, rules which are the foundation of our American system of free enterprise. . . . They broke the antitrust law. They deceived consumers and merchants. They crushed competition, not by being better or cheaper, but by deceit and unfair tactics."
MasterCard spokeswoman Sharon Gamsin has declined to comment on the settlement.
The judge in the case has barred the parties involved from discussing the settlement specifics.
The deal between MasterCard and some four million retailers was announced just as jury selection was about to get underway in a trial that has taken some seven years to get to this point. Wal-Mart, Sears, and millions of other retailers charge that the “honor all cards” policy held by 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 debit cards issued by MasterCard and Visa have higher transaction fees, and therefore, the retailers say, they cost both the retailer and the consumer more money.
Potential damages in the case have been estimated to be as much as $39 billion.
Now, however, Visa stands alone in defense of the debit card policies, and says that it does not plan to settle.
Visa Vice President Daniel Tarman said today in a statement: "Visa is focused on demonstrating at trial that our practices are legal, appropriate and in the best interest of consumers,” and that "Visa will continue our efforts to preserve a payments system that serves Member financial institutions and merchants, and that delivers to consumers a vast array of choices of how to pay for goods and services."
Lloyd Constantine, a New York lawyer representing Wal-Mart and the other retailers, said, "Visa and MasterCard refused to play by the rules of fair competition, rules which are the foundation of our American system of free enterprise. . . . They broke the antitrust law. They deceived consumers and merchants. They crushed competition, not by being better or cheaper, but by deceit and unfair tactics."
- KC's View:
- We can’t imagine any circumstances under which Visa won’t settle, now that MasterCard has broken ranks. However, anything can happen, as the ludicrous statement by Visa’s vice president illustrates. This isn’t a case about choice. It is a case about costs, and how these credit card companies are running them up to the detriment of consumers and retailers.
