MasterCard International Inc, the world's second-largest credit-card issuer, settled an anti-trust suit with Wal-Mart Stores Inc and other retailers over debit-card fees as it was about to go to trial.
Terms of the agreement weren't disclosed, leaving Visa USA Inc, the largest card issuer, as the sole defendant. Some 5 million merchants, demanding more than US$39 billion in damages, sued Visa and MasterCard for forcing them to accept higher-fee debit cards as a condition of taking credit cards.
Should the retailers win, Sears, Roebuck & Co, Circuit City Stores Inc and Safeway Inc, among others, could reduce their costs on transactions processed with some debit cards. They could refuse to process debit transactions that require a signature, instead encouraging customers to use personal identification numbers, or PINs.
"I think it was a very smart move by MasterCard," said David Balto, an expert in anti-trust law who is a former director of policy at the US Federal Trade Commission.
"I think the problem of being a smaller co-defendant like MasterCard in a case like this is that it's hard for a jury to distinguish between one defendant and another, and at times you can be unfairly tarred with the bad acts of the larger defendant," he said.
Some details of the settlement were still being worked out, people familiar with the matter said. MasterCard agreed to pay some money and to change some of its practices, the people said.
The merchants had said before trial that any settlement would have to include an end to the link between credit and debit cards.
MasterCard's agreement stre-ngthens the merchants' position in bargaining for a settlement with Visa, lawyers said. Retailers now have a minimum amount they can demand in any negotiations, making settlement talks more costly and difficult for Visa, which has twice the market share of MasterCard.
"It shortens and simplifies the trial," Lloyd Constantine, the merchants' lawyer, said.
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