RIVERWOODS, Ill. — Discover Financial Services stands to receive a significant payout from the resolution of some long-standing litigation with Visa and MasterCard.
Credit unions and banks that issue Visa should pay attention to the case, according to lawyers familiar with it, because if the cost of settling exceeds reserves set aside for the case, Visa has said it would raise more cash through further stock sales. Such a sale would dilute the value of the Visa stock that credit union issuers were previously given, the lawyers explained.
This particular legal tussle stems from a former Visa and MasterCard practice that prevented banks that issued either of their brands from issuing cards under another brand, the so-called exclusionary rule. A previous legal fight between the card brands and the U.S. Justice Department began with a suit from the government in 1998 over the anticompetitive nature of the policies.
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