MasterCard Wins Injunction Against Visa
Issuers Free to Terminate Visa Debit Agreements.
Purchase, NY,- Federal Judge Barbara Jones ruled yesterday that Visa’s Settlement Service Fee (“SSF”), implemented in the wake of the settlement of the merchant lawsuit in 2003, was unlawful and must be repealed, MasterCard reported today.
“This is a significant win for MasterCard and its customers,” said Noah J. Hanft, MasterCard general counsel. “With this roadblock out of the way, financial institutions will not be deterred by this coercive fee and can make decisions based on their best judgment about quality of service, strength of brand and other competitive factors that benefit their cardholders.” Mr. Hanft continued, “Banks that were prevented from fully evaluating MasterCard’s debit offering because of the SSF will now be permitted to terminate their agreements with Visa in order to issue MasterCard debit cards.”
In addition to requiring that Visa repeal the SSF, Judge Jones also issued an order allowing all of Visa’s top 100 debit issuers, with Visa debit agreements that were signed while the SSF was in place, to terminate such agreements in the event that they enter into a new agreement with MasterCard to issue debit cards on MasterCard’s network. In the coming months, all issuing financial institutions in the United States must be notified of the remedy in Judge Jones’ decision.
Judge Jones found that the SSF effectively prevented Visa’s top 100 debit issuers from issuing on MasterCard’s network. Mr. Hanft said Visa’s intention to put in place a coercive fee to block issuers from making independent brand decisions was unmasked by the Court through extensive evidence, including Visa’s own internal documents.
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