Summary
Visa Inc. (V) filed an 8-K report on February 7, 2011, detailing significant agreements related to ongoing interchange litigation. The company entered into a Consent to Amendment of Loss Sharing Agreement (LSA Amendment) and a Consent to Amendment of Interchange Judgment Sharing Agreement (JSA Amendment). These amendments are part of a broader Omnibus Agreement that also involves MasterCard Incorporated and other financial institutions. The Omnibus Agreement establishes a framework for sharing liabilities and settlements arising from interchange litigation related to the practices of both Visa and MasterCard. Key terms include a defined allocation of settlement and judgment portions between MasterCard (33.3333%) and Visa (66.6667%) for claims that don't exclusively assign responsibility to one payment system. Visa plans to fund its portion through reductions in its Class B share conversion rate and potential indemnities from its financial institution members.
Key Highlights
- 1Visa Inc. entered into an Omnibus Agreement regarding interchange litigation, settlement, and judgment sharing with MasterCard and other financial institutions.
- 2The agreement amends the Loss Sharing Agreement (LSA) and Interchange Judgment Sharing Agreement (JSA) to formalize the terms of liability allocation.
- 3Settlements and judgments in the covered interchange litigation will be allocated 66.6667% to Visa and 33.3333% to MasterCard, unless responsibility is solely assigned to one party.
- 4Visa will have no liability for monetary awards assigned solely to MasterCard-related claims.
- 5MasterCard will have no liability for monetary awards assigned solely to Visa-related claims.
- 6Visa intends to fund its share of settlements or judgments through reductions in its Class B share conversion rate and/or contractual indemnities from its financial institution members.
- 7This filing addresses ongoing litigation that could have significant financial implications for Visa.