Today, a reporter suggested we should be happy that Visa Inc. is setting aside a $3 billion reserve for our litigation. No, not really.
The credit card giant is playing an unfriendly game in its pursuit of detachment from their legal liability for illegal price-fixing by agreement. If you step back and read several of our preceding comments, you will notice that when first announced, many hinted that Visa Inc. could anticipate raising $5 billion, then it was $10 billion. Now, it is nearly $19 billion.
Was this caused by unearthly market conditions, inflation or because they were simply padding the amount of money they hope to raise to cover their legal liabilities?The worry is that they could simply use investor proceeds to fund settlement of our litigation and then continue raising merchant interchange rates to more than cover the lost revenues. To us, that is as unfair as are their interchange fees.A review of the earlier credit card litigation identifies that for merchants and consumers, the fair market economy is still broken and there still is no real electronic payment competition. Visa and MasterCard’s cartel-like pricing structure still precludes a real resolution to interchange fees. From the preceding resolution, Visa and MasterCard simply raised other rates to adjust for their penalties, thus more than paying for their fines.
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