Consumer Payment Card News

Ghost Story

The U.S. Supreme Court has decided not to review the Second Circuit Court of Appeal’s decision upholding a grant of class certification in the antitrust lawsuit brought against MasterCard and VISA by a group of U.S. merchants. The so-called Wal-Mart debit card lawsuit pertains to the retailer’s right to refuse signature-only debit card transactions and could produce damages of up to $40 billion against VISA and MasterCard if successful. Some previous estimates have ranged from $80 billion to $100 billion. Nevertheless, the stakes are high and the rhetoric is heating up. The lead attorney for the retailer plaintiffs, Lloyd Constantine, reportedly stood beneath a slide of dancing skeletons during a recent speech in Brussels and ranted about putting VISA and MasterCard out of business. Constantine has also accused VISA and MasterCard of stalling the case, for example, in appealing to the Supreme Court to review the class action issue. MasterCard and VISA insist Mr. Constantine is telling ghost stories and that the challenge to the “Honor All Cards” rule will not stand up in court. One year ago, VISA and MasterCard filed an appeal to the Second Circuit Court of Appeals seeking to reverse Federal District Court Judge John Gleeson’s decision granting class-action status. The lawsuit, originally filed by Wal-Mart, Sears and eleven other retailers, contends retailers are victims of an illegal tying arrangement, under which merchants are forced to accept VISA Check and MasterMoney off-line debit cards under the associations’ “Honor All Cards” rule. Retailers want the option to deny customers the right to use an off-line VISA/MasterCard debit card, forcing consumers to use PIN numbers on such debit cards. The retailers also contend that VISA and MasterCard conspired to monopolize the POS debit card market and suppress the growth of competing regional ATM/POS payment systems.

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