The Street’s Dan Freed cautioned investors that this month a major lawsuit against Visa, MasterCard, and many large credit card issuers has been pushed under the carpet which could have brought many positive changes to the payment market place.
The case will not be in the courtroom till the coming September, many analysts have started speculating about its results after knowing the judge who will be chairing the case.
Judge John Gleeson handed down a $3-billion judgment against the credit card industry in 1996, deciding in a case which was brought by a coalition of mall specialty stores and big retailers.
In this case, the banking industry is facing the wrath of an anger crowd of more than five million small businesses which have decided to take legal action in this year. These coalition partners charge that a competitive payment processing marketplace would charge much lower fees without the alleged collusion of Visa, MasterCard, and major banks.
Lawyers who are representing the merchants and retailers say that the banking networks spun Visa and MasterCard into separate companies to avoid showing a monopoly so as to be able to take it all. There are some Wall Street analysts who are expecting Gleeson to reach a similar decision, which may incite the payment settlers to take the decision outside the courtroom and settle at a lesser value.
One Deutsche Bank report suggests that a settlement which will bring United States transaction fees in equal to those taken in other parts of the world would decrease the bank revenues as much as four times as the dip banks experienced after the passage of the Durbin Amendment. Right after that law decision, many banks removed the rewards points from their debit and credit cards and changed the free on checking accounts and other banking products.
American Express managed to stay away from this court case as it has its own independent payment processing network with exchangeable fees which will often cost the merchants more than when they use Visa or MasterCard transactions. Although this company also has a small number of related cases, its CEO Ken Chenault has previously gone on record defending his company’s rates as reflecting the added costs of premium customer service, fraud detection, and to purchase protection programs which are all said to be provided in the credit cards functionality.
Similar Credit Card News:
- [October 7, 2011] Google Announce Expansion Of Google Wallet
- [March 8, 2012] Intel And Visa Form Coalition To Move Mobile Trade
- [October 19, 2011] Durbin Amendment Repeal Process Starts
- [March 21, 2011] MC Waives Fees on Japanese Relief Donations
- [July 12, 2011] Visa Launches New Security Sense Website
- [October 1, 2012] Bank of America Settles Merrill Lynch Suit
- [January 26, 2011] Predicted Rapid Growth In Mobile Payments