Released: November 08, 2007

Visa to pay up to $2.25 billion to Amex

Source: Associated Press [USA Today]

Visa will pay American Express (AXP) up to $2.25 billion to settle a lawsuit alleging Visa illegally stifled competition to protect its position as the largest U.S. credit card network. The truce announced Wednesday rids Visa of a potential albatross before the San Francisco-based company’s initial public offering of stock, which is expected to occur early next year.

Besides raising financial uncertainties, the case threatened to raise embarrassing questions about Visa’s past business practices with a September trial date looming.

The settlement also covers the owners of five major banks that issue Visa credit cards: U.S. Bancorp, Wells Fargo, Washington Mutual, J.P. Morgan Chase and Capital One Financial.

New York-based American Express plans to use a large chunk of the money to help cover the costs of rewarding current and future customers for using their credit cards more frequently.

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