The settlement of Visa and MasterCard with retailers — amounting to $3 billion over the next ten years — will not impact credit card ABS, as “The industry’s credit card practices were never targeted by the lawsuit,” noted Banc One Capital Markets researcher Alessandro Pagani in an industry comment.
The settlement stems from six-year old antitrust claims against the two payment networks, led by Wal-Mart, which objected to Visa and MasterCard forcing retailers to accept their debit cards. The change will have an impact on the company's profitabilities, Pagani said. Standards & Poor’s placed MasterCard’s debt rating, currently at single-A, on review for downgrade.
Meanwhile, Deutsche Bank, which also believes that there will be limited if any impact on ABS from the settlement, noted another developing lawsuit involving Applied Card Systems, affiliate of ABS issuer Cross Country Bank. That lawsuit — filed by attorney generals in NY and Minnesota — involves claims of fraud, and is similar to a pending suit by the state attorney general in New Hampshire against ACS.