Wednesday, May 17, 2006

MasterCard's® Legal Bill Could Be $26 Bln (from report in CardLine)

( - The Credit Card Interchange Report) -- CardLine on May 17 reported that Bernstein Research analyst Howard Mason said MasterCard's® legal bill could reach $26 billion from interchange and other litigation.

The potential damages are being called a "tsunami" which would affect not just MasterCard®, but its much larger partner, Visa® - member banks own both payment associations. see MasterCard® and Visa® as partners because the organizations are both owned in many cases by the same financial institutions.

Even one of their leading corporate backers, Bank of America®, which is their third largest shareholder with a nearly 7% stake is looking to distance itself by announcing its interest in launching a separate payment card service. - The Credit Card Interchange Report thinks that even boozy investors risk foiling the planned IPO once they evaluate the "Risk Factors."

According to CardLine, Mason estimated that with treble damages, MasterCard's exposure from the interchange litigation could be high as $20 billion. This overshadow's MasterCard's® planned $2.6 billion IPO next week. Keep in mind, these damage estimates are just attributed to MasterCard. The antitrust litigation is also locked on to Visa and many of its member banks too.

[Source:, with reference to report in CardLine]