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Retailers win card appeal
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October 18, 2001: 4:08 p.m. ET
Merchants may sue Visa, MasterCard as a class on forced use of debit cards.
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NEW YORK (CNNmoney) - A federal court rejected an appeal Wednesday to stop a lawsuit against Visa and MasterCard from including some four million U.S. retailers, in the latest blow to the leading credit card networks.
In a 2-to-1 decision, a panel of the appeals court in Manhattan turned down an appeal from Visa and MasterCard to stop retailers from getting class certification in a 1996 suit accusing the card networks of using their dominance in credit cards to force merchants to also accept their debit cards.
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MasterCard disagreed with the decision and said it would seek a reconsideration by the full Court of Appeals.
"MasterCard strongly disagrees with the majority opinion issued yesterday by a panel of the Second Circuit Court of Appeals upholding the grant of class certification in the merchant antitrust action," said Noah Hanft, general counsel for MasterCard International.
Earlier this month, Visa and MasterCard suffered a setback in a separate case when a federal judge ordered the networks to end a policy blocking member banks from issuing cards from rivals like American Express Co (AXP: up $0.05 to $30.10, Research, Estimates).
"The merchants have won the appeal and Visa and MasterCard have lost the appeal, as we expected," the plaintiffs' lawyer, Lloyd Constantine, said. "We are gratified and are now going to trial." A trial date has not been set yet.
Wal-Mart Stores Inc. (WMT: down $0.32 to $51.90, Research, Estimates), the world's largest retailer, and others object to being forced to accept certain types of Visa and MasterCard debit cards because they claim these cards carry higher fees. Visa has stood by a policy that retailers must honor all its cards.
The disagreement centers around off-line debit cards in which transactions are manually processed rather than automatically processed by simply swiping the card and entering a pin number.
The plaintiffs argue that the fees for off-line cards are higher because of the handling required.
"The decision in no way relates to the merits of the case," Hanft said. "We remain confident that our position will prevail and that consumers will not be disadvantaged by the efforts of class action lawyers to impede the ability of cardholders to use their MasterCard cards wherever MasterCard is accepted." 
from staff and wire reports
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