REUTERS - Visa Inc
The seven-year old case in Brooklyn federal court accuses Visa and Mastercard of conspiring to raise stores' fees for processing their payment cards. Visa, Mastercard and the banks that issue their payment cards are accused of working together to steer merchants toward certain forms of payment.
U.S. District Judge John Gleeson has supervised at least three settlement conferences between the parties since December, the court docket showed. A trial is tentatively scheduled to begin in September.
Spokespersons for Visa and MasterCard declined to comment on Friday. A lawyer for the plaintiffs, Craig Wildfang, declined to comment. Other lawyers for the defendants either declined to comment or did not immediately return requests for comment Friday.
In a June 25 analyst report, Morgan Stanley analysts led by Glenn Fodor said senior leaders from Visa and MasterCard participated in two days of settlement talks last month, a sign that Judge Gleeson is pressing for a settlement.
"Our view has always been that there is a very low likelihood of this case going to trial, and these actions by the court support that view," the Morgan Stanley analysts wrote.
Merchants who brought the lawsuit - including D'Agostino Supermarkets Inc and Payless Shoe Source - said rules that prevent them from offering discounts for paying in cash or pushing customers toward a less costly form of payment are costing stores an estimated $50 billion each year.
The case raises similar claims to another consolidated set of cases in Brooklyn federal court, filed by retailers in 1996. Visa and Mastercard paid $3.05 billion to settle that case, which only covered conduct up to January 1, 2004. According to plaintiffs in the latest case, the card companies' behavior has continued virtually unchanged since then.
Merchants bringing the latest case estimate that monetary damages could run into the tens of billions of dollars - a figure that Visa and MasterCard deny.
In its report, Morgan Stanley agreed with the consensus estimate that the settlement could cost about $10 billion. MasterCard would likely pay its portion over several years while Visa would be "insulated from direct economic exposure" because of a plan already in place to cover the costs of the settlement.
Banks that issue credit cards could also be affected by the settlement. Interchange fees could be lowered and banks could pay penalties partly covered by the shares they received in Visa's public stock offering, according to the report.
"Any greater reduction in interchange fees or penalties is likely a negative for bank stocks, though the degree of impact will ultimately be a function of the overall terms of the settlement," the report said. (Reporting By Rick Rothacker in Charlotte, North Carolina, and Jessica Dye in New York.)