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MasterCard Settles Wal-Mart Suit Over Debit Fees, Visa Will Fight

By Brooke A. Masters

MasterCard International Inc. agreed Monday to settle its share of a multibillion-dollar antitrust suit in which Wal-Mart Stores Inc. and other retailers alleged that the credit card company illegally forced them to pay high debit card processing fees.

But Visa USA Inc. said it plans to defend an identical policy requiring merchants that accept its credit cards also to accept its signature-based debit cards. Those cards cost merchants far more than bank network debit cards that require users to key in a personal identification number (PIN).

If the retailers win the six-year-old lawsuit, stores such as Wal-Mart, Sears, Roebuck and Co. and Circuit City Stores Inc. could cut their transaction costs by refusing to take signature-based debit cards. But would-be debit card users could run into trouble, because three-quarters of merchants do not have the keypads necessary for using PIN-based cards. Some banks also require consumers to pay fees for using their PIN-based cards.

“Nothing good can happen for the consumer. They aren’t paying the fees” for signature cards, said David Robertson, publisher of The Nilson Report on the credit card industry. “Right now I can use my Visa debit card at any merchant ... [If the retailers win], five million merchants can say I’m not going to take your debit card.”

But former Federal Trade Commission policy director David Balto, now in private law practice, said allowing stores to pick and chose among debit cards “will result in lower prices to consumers.”

Opening arguments in the class-action lawsuit are slated for Wednesday in the Brooklyn federal courthouse. U.S. District Judge John Gleeson ordered MasterCard and the retailers not to discuss the terms of their settlement for fear of tainting the jury that was picked Monday to hear the Visa case.