Visa, MasterCard Face Another Anti-Trust Suit
The National ATM Council and assorted independent ATM deployers have filed an anti-trust suit against Visa and MasterCard.
The suit alleges that Visa and MasterCard have unlawfully restrained trade by setting ATM fees that must be the same across any and all ATM networks.
In their complaint, the deployers argued this was partly a hold-over from the days when the two brands were associations of financial institutions and there were few, if any, ATMs deployed by non-financial institutions.
Preventing independent ATM deployers from setting network fees keeps them from maximizing profit in some circumstances and offering less expensive ATM services in other scenarios.
“In a reasonably competitive market, ATM operators would set access fees at a level reflecting the cost of obtaining the network services and other inputs necessary to complete the transaction,” the plaintiffs wrote in their complaint. “ATM operators would set access fees lower for transactions routed through lower cost ATM networks relative to access fees for transactions routed through higher-cost networks. However, the ATM restraints fix and maintain access fees at the same level irrespective of which network completes the transaction or what those services actually cost.”
The complaint seeks class action status; the firms estimated that there are 350 independent ATM deployers as potential members of the class.
None of the parties to the suit have commented on the complaint. Visa and MasterCard have filed reply briefs yet.
It's unclear what the suit could mean to credit unions. Even though credit unions participate in ATM networks following Visa and MasterCard rules, the companies are no longer associations so financial institutions will not suffer damages from a loss.
On the upside, some analysts who had not yet read the complaint speculated that credit unions could benefit from a more open ATM industry as they deploy ATMs and issue ATM cards. They were also encouraged that the analysts at Keefe, Bruyette & Woods did not find a reason in the complaint to downgrade their outlook for either Visa or MasterCard share prices.
“At this point we think it’s hard to ballpark the extent of the potential damages from this lawsuit,” the firm said. “However, it seems to us as if the economics at play for [Visa] and [MasterCard] (which is likely impacted to a lesser extent given its relatively small PIN debit market share) are relatively small. In fact, the document cites damages in the 'tens of millions of dollars,' prior to trebling, which is relatively immaterial. Ultimately, this adds to the list of headline risks that investors face owning the network stocks. However, we still believe the upside opportunity [of the companies] shares remains compelling and maintain our Outperform ratings.”