In Credit Card Lawsuit, Biggest Winner is Debit Card

Bank Technology News, June, 2003 by Karen Krebsbach

The fallout from the surprise deal last month between MasterCard International and Visa USA to settle a lawsuit over fees is likely to roughly resurface-rather than level-the playing field between retailers and credit card companies. And credit card firms will continue their bumpy ride, as the deal widens the gap between the use of signature versus PIN-based debit cards.

Under the settlement's terms, MasterCard will fork over $1 billion to retailers in the next decade, while Visa will pay $2 billion. Immediately, both firms will have to pay $25 million. The deal also cuts merchant fees paid to the firms when Visa- or MasterCard-branded debit cards are used.

The use of debit cards is growing at twice the rate of credit cards and is expected to grow faster than any...

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