Big Banks And Credit Card Companies are Wrapped Up in Antitrust Litigation
There’s a big lawsuit underway, involving 5 million retailers vs. MasterCard, Visa and some thirteen big commercial banks. A few of the banks entangled in the private antitrust litigation are Capital One Financial, Bank of America, HSBC, Wells Fargo, Citigroup, U.S. Bankcorp, JPMorgan Cahse, Fifth Third Bankcorp, Barclays, PNC Financial and SunTrust Banks. While this has gone largely unnoticed by the bulk of investors and analysts who dedicate a portion of their time to following those companies, there exists a very real possibility that the pending case may cost banks several billion dollars in the next several months.
There have been widely varying estimates made regarding the price tag on a settlement of the antitrust case, ranging from several billion dollars to several hundred billion. According to research conducted by Deutsche Bank, the financial companies are equally concerned about the risk that a settlement or even a judge’s ruling may result in the current 2% interchange that banks and credit card companies collect from retailers per credit card transaction being slashed, perhaps even as low as 0.5%. Rod Bourgeois, and analyst at investment management firm Sanford Bernstein revealed that 0.5% is the current interchange fee rate in Australia and it is higher than what is charged in the EU, which is 0.3%.
Such a change would have even a more devastating impact to the banking industry’s revenue than the Durbin Amendment which went into effect in October 2011 and caps the interchange fees that banks can charge merchants for debit card transactions.
Matt O’Connor, a Deutche Bank analyst, recently released a report which estimated that US Bankcorp would stand to lose nearly $1.2 billion from their 2012 revenues should the credit card interchange fee be reduced by 75%. This is nearly four times what O’Connor estimates that the bank has lost in revenue as a result of Durbin. O’Connor went on to estimate the losses of several other of the large retail banks throughout 2012 should the credit card interchange fee be slashed to 0.5%: Citigroup would lose nearly $3.02 billion; Bank of America stands to lose some $3.68 billion; and JPMorgan Chase is looking at a revenue loss of approximately $5.38 billion, as per O’Connor’s estimate.
Latest Credit Card Issuers News
Wells Fargo & Company has recently announced the release of tap-to-pay contactless consumer credit and debit cards. Wells Fargo cardholders are already familiar with the advantages of digital wallets and are involved in paying for purchases and initiating ATM transactions by means of their mobile phones, while tap-to-pay cards are something new.
Dog-lovers can get checks or credit cards printed with pictures of adorable pups. If you’d rather be at the beach, you can carry a credit card picturing the waves and sand. And now sports fans can order a new credit card with the logo of their favorite teams and players.
Loyal JetBlue customers have another reason to use Chase credit cards: the banking giant and credit card issuer has announced that the JetBlue TrueBlue loyalty program is the newest Chase Ultimate Rewards partner, and cardholders will now be able to redeem their reward points for travel on the airline.
Good news for American Express Platinum cardholders who live or travel in the Denver area: American Express has just announced plans to add a Centurion lounge to the Denver International Airport (DIA). And it will be huge—over 14,000 square feet—making it the second-largest Centurion lounge location.
The Walt Disney Company and Chase Card Services recently announced that they will continue their longstanding relationship, extending their co-branded Disney Visa Card, Disney Premier Visa Card and Disney Visa Debit Card programs in a multi-year agreement.