December 09, 2009
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News: Visa and MasterCard Pay Out Millions
The two giant credit card networks, Visa and MasterCard will be mailing out over 600,000 checks totaling over $1.1 billion as part of an antitrust lawsuit settlement. The current $1.1 billion is part of an overall settlement totaling over $3.4 billion. The lawsuit was originally settled back in 2003 between Constantine Cannon, a New York law firm and the two credit card networks. The law firm of Constantine Cannon represented the plaintiffs which included retailers, charitable organizations, government entities, and educational institutions. In the original agreement, the credit card networks agreed to a joint annual payment of $300 million through 2012. Visa was to pay $200 and MasterCard agreed to $100 million.
The new agreement allows the credit card giants to accelerate payment and save millions doing so. The settlement is considered one of the largest antitrust settlement payouts in the country's history. The companies began mailing out the checks on Tuesday and range between thousands of dollars to over $50 million. The terms of the suit also prohibit Visa and MasterCard from mandating retailers to accept their signature debit cards as a condition for acceptance as a Visa and MasterCard credit card acceptor. Additionally, the settlement mandates Visa and MasterCard to produce debit cards that make a clear distinction between debit and credit.
The checks will be a welcomed relief for retailers who are in the midst of the most important shopping season of the year. With consumer credit card spending down, retailers have had to cut prices and realizing lower margins. Companies who expect to receive a piece of the settlement include Wal-Mart, MC Sports, Lowe's, Family Christian Bookstores, Inc. and multiple small retailers. Meijer Inc. based out of Walker, Michigan, filed their own suit several years ago and settled independently with Visa and MasterCard some time ago. Robert L. Begleiter, partner of Constantine Cannon said the company is very pleased with a "gratifying conclusion to many years of intense effort."