Hefty Visa Settlement is Good For Consumers
So the American Express/Visa dispute is finally over - at least in the courtroom. A $2.1 billion settlement payable to AmEx in split payments was announced Wednesday. Am I the only one who doesn’t think this is over?
It’s definitely not over for MasterCard, a co-defendant in the suit who has not reached any agreement with AmEx and is still being pursued, according to AmEx CEO Ken Chenault. The lawsuit stems to claims that Visa and MasterCard illegally required banks that issued their cards to avoid issuing Discover or American Express cards. Five banks, originally named as co-defendants in the suit, have since been dropped.
Even though Visa settled, I doubt this will be the end of it. It’s also highly doubtful this will be the last time Visa and MasterCard will appear on court defending against antitrust allegations. The two companies have been plagued by legal troubles. The whole bank scandal was at the center of a Department of Justice antitrust suit against the two companies in 1998. Two years earlier, a class action suit brought by merchants against the two companies settled at the eleventh hour for $3.4 billion.
One wonders whether Visa and MasterCard will change their ways or keep playing dirty and paying the cost. Frankly, $2.1 billion seems like a comparative drop in the bucket in the credit card world. Consider all the income American Express missed out on all those years that banks were barred from partnering with them. I’d bet it would tally more than $2.1 billion.
At any rate, it’s a message to the world and an open door for AmEx to start hocking their cards more. As always, even in the credit card industry, more competition means more benefits for the consumer. Hopefully this could lead to more competitive terms and better customer service.
