MasterCard Settles With American Express
The past year has been good for American Express. Settlements have finally been reached in the company’s lawsuits against competitors Visa and MasterCard, claiming that the two credit card giants blocked their partnering banks from simultaneously offering credit cards from AmEx or Discover. And don’t worry, Discover will get its day in court too, with a civil trial date set for September.
Visa took the hardest hit, with a $2.1 billion settlement owed in split payments. MasterCard, on the other hand, will pay “only” $1.8 billion to American Express. Despite the fact that news of the settlement broke today, the very buoyant MasterCard shares rose while American Express shares declined. This is being blamed largely on uncertainty about the stability of the credit card industry, concerns that are very likely fueled by comments such as the following, reported by the Associated Press:
“Business conditions continue to weaken in the U.S. and so far this month we have seen credit indicators deteriorate beyond our expectations,” said AmEx Chief Executive Kenneth Chenault in a statement.
This is, by the way, the second time this year American Express has underestimated its losses, according to the Associated Press. They’re hardly the only free bleeders in the credit industry right now. Ah, the world of plastic in 2008 — what a wiley, woeful ride it’s destined to be.
