Discover Financial Services has settled its lawsuit filed against Visa Inc. and MasterCard Inc. The lawsuit sought damages for practices that suppressed third-party issuing on the Discover Network and the acceptance of its cards. Under the terms of the settlement agreement, Discover will receive up to $2.75 billion from Visa and MasterCard. Discover will receive approximately $862 million of the settlement in the current fiscal quarter and up to approximately $472 million per quarter in 2009.
Visa is responsible for $1.8875 billion of the settlement amount. MasterCard will pay $862.5 million reflecting the terms of a judgment-sharing agreement with Visa that was finalized in July, 2008. In addition, in connection with the settlement, Morgan Stanley, Discover’s former parent company, agreed to pay MasterCard $35 million.
Discover says the settlement will further “strengthen its capital base in this challenging economy” and also will “support continued investment” in growing its business, including broadening global acceptance, expanding network volume and growing its “deposit franchise.” This litigation had been around for a while and is finally over with a win for Discover. Lloyd Constantine, a New York lawyer, handled this litigation and did a tremendous job.
Source: Payments News
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