Under the outline of the settlement, Visa will pay $2 billion to retailers and will reduce the fees it charges merchants on some debit card purchases, according to a person close to the retailers' legal team. MasterCard, under its settlement, agreed to pay $1 billion and also agreed to cut its fees, according to the person close to the retailers. Both will pay $25 million of the settlements immediately.The Wall St. Journal is also covering this story tonight. Visa USA's press release is available online.
"As it has in the past, the 'Honor All Cards' policy remains a core principle of the Visa payment system. By agreeing to modify the policy, Visa preserves the essential benefits and features that our system has provided to consumers and merchants for more than 35 years. With this business dispute behind us, Visa will redouble our efforts to innovate on behalf of cardholders and merchants and to vigorously compete in the marketplace. "Beginning January 2004, merchants will decide whether they want to continue to accept Visa's popular debit products. Just as it is clear today with the familiar Visa blue, white and gold logo, it will be clear in the future to consumers where they can use their Visa cards. We are confident merchants will continue to accept the popular debit card providing customers with the widest array of payment options, and we are pleased that our cardholders will continue to enjoy all the benefits and features Visa cards offer. "This agreement allows Visa to do all it can to preserve consumer choice at the checkout counter, while minimizing confusion. "Visa will now do what it does best: lead the market in developing the products and services that consumers, merchants and Member banks value. Today, more than 60 percent of U.S. consumer payments are made with cash or checks, and Visa is focused on competing vigorously to capture an even greater share of the $4.8 trillion in annual spending that now goes to cash and checks. "Visa remains the market leader in debit with more than 120 million Visa check cardholders making more than 25 million transactions a day in more than 5 million locations in the U.S."Also tonight, counsel for the merchants in this case released their own press release announcing a press conference to be held tomorrow morning at 10 AM EDT.
"MasterCard and Visa have now agreed to settle the case with the merchants," said Lloyd Constantine of the New York firm Constantine & Partners. "The world of debit is about to change for the better, for merchants and for consumers. Five million merchants will now get relief from excess fees that were forced down their throats by MasterCard and Visa. Competition will be restored to the debit card market and off-line signature debit transaction fees will drop. Consumers will continue to have the choice to use debit cards that are competitively priced. Billions of dollars in excess costs to merchants will be eliminated during the coming years and that should mean lower prices for consumers."