Discover Financial Services has announced
that "it has reached an agreement with Visa Inc. and MasterCard Inc. in the settlement of a lawsuit seeking damages for practices that suppressed third-party issuing on the Discover Network and the acceptance of its cards. "
Under the terms of the settlement agreement, Discover expects to receive up to $2.75 billion in the settlement of its lawsuit against Visa and MasterCard. Discover will receive approximately $862 million of the settlement in the current fiscal quarter and up to approximately $472 million per quarter in 2009.
Visa said it is responsible for $1.8875 billion of the settlement amount. In a press release, Visa said that amount "includes $1.7425 billion from the escrow created under Visa's retrospective responsibility plan, $80 million from Visa Inc. to obtain releases from MasterCard, and an additional $65 million which will be refunded by Morgan Stanley under a separate agreement related to the settlement."
MasterCard announced it will pay $862.5 million reflecting the terms of a judgment-sharing agreement with Visa that was finalized in July, 2008. In addition, MasterCard reported that, in connection with the settlement, Morgan Stanley, Discover's former parent company, agreed to pay MasterCard $35 million.
READ MORE »