Visa legal issue won't affect credit card industry - exec

MANILA, Philippines - The legal setback caused by an anti-trust class action against Visa International Inc. and other financial institutions in the US will not adversely impact on the Philippine credit card industry, a top company official has assured.

In an interview with The STAR, Visa Worldwide Pte. Ltd. group country manager for Southeast Asia and Australasia Peter Maher said this issue had been pre-existing since 2005 and Visa had already made provisions for it.

“There would be no effect on the local market,” Maher said.

He pointed out that this legal matter involves only some US banks and said US retailers which are part of the “overcharging” case.

Earlier this month, Visa International along with MasterCard and some US financial institutions entered into the largest anti trust settlement agreement in US history by agreeing to pay more than $6 billion to retailers, who argued that the credit companies conspired to fix the prices that retailers have to pay when people buy things with credit cards.

The proposed settlement payments for both the class and individual claims would be approximately $6.6 billion, of which Visa’s share would represent approximately $4.4 billion.

Maher said they have undertaken a shares flotation to cover for the settlement.

On March 18, 2008, Visa conducted an initial public offering (IPO) of 406 million shares at $44 per share. This undertaking raised some $17.9 billion in the largest IPO in US history.

For the quarter ending June 30, 2012, Visa intends to record a litigation charge of approximately $4.1 billion, which will increase its total FAS 5 reserve for the litigation covered by the Retrospective Responsibility Plan from $285 million to approximately $4.4 billion, to reflect the class plaintiffs’ settlement agreement and management’s current estimate to resolve the individual plaintiffs’ claims.

“We believe settling this case is in the best interests of all parties,” Joseph W. Saunders, chairman and chief executive officer of Visa Inc., said in a company statement. “We are comfortable with the terms, which we do not anticipate will impact our current guidance. Visa is well positioned to help drive the migration to electronic payments in the US and globally.”

Consistent with commitments Visa made at the time of its restructuring, the settlements are subject to approval by Visa USA voting members representing two-thirds of membership proportion.

“This agreement should remove the distraction of litigation for all parties,” said Joshua R. Floum, general counsel of Visa Inc. “We will go forward with a focus on helping retailers grow their businesses and providing them with efficient and valuable payment options.