Credit card giants settle in US lawsuit

NEW YORK - Visa and MasterCard, the world's dominant credit card payment processors, have agreed to settle claims arising from complaints by retailers, who say the companies charge too much and act to stifle competition.

The US Department of Justice has for two years been investigating the pair, alongside American Express, in one of numerous legal threats to the business models of the big credit card companies. Yesterday, it sued all three and simultaneously announced a settlement with Visa and MasterCard.

American Express, however, said it would fight the lawsuit, which was announced by the Obama Administration's Attorney-General, Eric Holder yesterday. "We do not intend to settle," said a spokesman for AmEx.

The credit card companies' terms and conditions, under which retailers and other merchants are able to offer customers the option of paying by card, include numerous clauses that have proved controversial.

They prevent merchants from charging extra to customers or from trying to steer them towards less expensive payment options, and they require merchants to accept every type of card banks and other issuers offer. Visa, Mastercard and AmEx take a cut of all payments made.

The three companies have been dogged by lawsuits from retailers in the US and Europe, and regulators across the world have been investigating.

The settlement by Visa and MasterCard in the US yesterday is the most significant development so far, and is expected to usher in more flexible terms and conditions.

Visa signalled in July that it did not expect to have to pay punitive damages for its past practices.

"We are currently engaged in constructive negotiations with the [Justice] Department to resolve its concerns as it relates to Visa without litigation or payment of monetary damages," it said.

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