Bank One estimates Visa settlement costs at $60 million
12 May 2003 | 6578 views | 0
Bank One says it expects Visa's $2 billion debit card settlement with US retailers will cost the bank some $60 million in pre-tax revenues.
The bank, the sixth-largest in the US, estimated the costs of the retailer settlements in a quarterly Securities and Exchange Commission filing last week. Bank of America has already put its annual losses from the settlement at about $200 million a year.
In addition to a total $3 billion pay-out, the out-of-court settlement with the card schemes also signalled a forthcoming reduction in debit card fees and changes to the honour all cards rules which would allow retailers to reject signature-based debit cards at the check-out.
In its filing, Bank One says the estimated loss in earnings depends on pending negotiations between card schemes and retailers over next year's charging structures.
Other banks likely to be hit hard by the retailer victory include JPMorgan Chase and Citigroup.
Dove Consulting last week suggested that savvy issuers may be able to recoup losses by encouraging the use of debit cards for recurring bill payments and online transactions. Up until now, billers that wanted to accept only debit were also forced to accept credit because of the honour all cards rule.