NEW VISA/MC

With a merchant backlash breathing down their necks, VISA and MasterCard are remaking themselves into more open organizations by bringing in non-banking outsiders to oversee their business. Last week VISA USA’s board of directors added four independent members with plans to add another four independent directors soon. VISA is also adding a board seat to represent smaller institutions. MasterCard this week announced it will change most of the Directors on its current Board to outside members after its upcoming IPO. MasterCard is gearing up to go public, raising about $2.7 billion. MasterCard has named six new outside board members and four more will be selected within the next year to serve with two current members, including MasterCard’s CEO. Over the next twelve months two more Directors will be elected by the company’s public shareholders and another two Directors will be elected by MasterCard’s bank shareholders. The two payment card networks, which have long be able to raise merchant fees even though volume steadily increased, hit a wall this year. Merchants have resisted further fee increases and are litgating recovery of past fees. The merchant backlash has been bolstered by a landmark $3 billion 2003 settlement in the debit card lawsuit. Merchants are now seeking recovery of credit card merchant fees.