- The Washington Times - Tuesday, April 29, 2003

NEW YORK (AP) MasterCard International reached a last-minute settlement with thousands of retailers yesterday just before a multibillion-dollar lawsuit concerning debit card practices was set to go to trial.
   
   The settlement left Visa USA to battle it out in court with the retailers, including big names Wal-Mart, Sears and Circuit City.
   
   The retailers say Visa and MasterCard have trapped them into paying high fees by demanding that stores accept their debit cards along with their credit cards.
   
   They also say the card companies are stifling competition.
   
   Visa and MasterCard say their “honor all cards” policy increases customer choice.
   
    Both sides say they are fighting for the best interest of consumers.
   
   U.S. District Judge John Gleeson did not give details of the MasterCard settlement, and he barred both sides from discussing it publicly. “I don’t want this jury pool tainted by that,” he said.
   
   While details were being finalized late yesterday, a source close to the settlement said it would involve a payment from MasterCard and a change in some of MasterCard’s business practices.
   
   The framework of the settlement was reached after a weekend of negotiations that at times “actively involved” the judge, the source said on the condition of anonymity.
   
   Meanwhile, attorneys for Visa and the retailers settled on a jury, and Judge Gleeson scheduled opening arguments for tomorrow.
   
   Attorneys for the merchants have declined to place a dollar figure on damages they will seek if they prevail.
   
   But some independent analysts said Visa and MasterCard together could have been liable for as much as $45 billion.
   
   The 1996 suit said Visa and MasterCard unfairly require merchants to accept their debit cards, which require a customer’s signature to verify a transaction.
   
    The plaintiffs say the process costs consumers more money.
   
   Many retailers would rather use less-expensive, independent networks that clear debit card transactions using a personal identification number, or PIN.
   
   The matter is going to trial at a time when debit cards which deduct cash from an existing bank account rather than building up debt in a credit account enjoy high popularity.
   
   Visa wouldn’t comment on the MasterCard settlement.

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