US debit card action continues
Supreme Court rejects submission from Visa and Mastercard
June 11 2002
The court action bought by US retailers’ against Visa and MasterCard will be allowed to continue.
The United States Supreme Court has rejected an application by the card issuers to reject the lawsuit, initially bought by Wal-Mart but joined by many other retailers, including Sears, Roebuck and US supermarket giant Safeway Inc.
The case centres on Visa and MasterCard’s “honour all cards” policy, which means retailers accepting their credit cards must also accept debit cards. Retailers claims the debit cards are less secure, since unlike US credit card transactions they do not use a PIN system, and also say the fees charged by the card issuers are too high.
Visa and MasterCard say it is a matter of consumer choice, but their submission to the Supreme Court was based on the argument that the 4m retailers with a potential claim under a class action suit made the case unmanageable.
The card issuers say they could lose as much as $100bn, a figure the retailers say is exaggerated. Following the Supreme Court decision, it is thought that lawyers for both sides will discuss an out-of-court settlement.
