Visa and First Data Bury TheHatchet

SAN FRANCISCO - (07/06/06) – Visa USA and First Dataannounced Wednesday they have agreed to settle a four-year-oldlawsuit over the processing of Visa card transactions. A 2002 suitby Visa and subsequent counter-suit by First Data surrounded FirstData’s use of its own network to process Visa transactions,which Visa requires all processors to run through its own VisaNetprocessing network. First Data hoped to save on transactions costsby bypassing VisaNet with its own system, called First Data Net.Under the settlement, First Data agreed to move existing Visa cardtransactions conducted over its private network onto VisaNet, whilethe two firms pledged to work together to build a stronger businessrelationship to focus on streamlining the payments processingbusiness. Visa sued in First Data in 2002, claiming creation ofFirst Data’s own closed-loop system violated Visa rules thatrequire all Visa card transactions be run through VisaNet. FirstData countersued, claiming that Visa’s position constituted aviolation of antitrust laws. The settlement allows Visa, whichalong with MasterCard is the target of more than three dozenantitrust suits brought by merchants, to put one big legalchallenge aside. it is also believed to provide a stream of incomefor First Data, though neither side would disclose financial termsof the deal.