By Andrew R. Johnson Of DOW JONES NEWSWIRES NEW YORK -(Dow Jones)- Visa Inc. (V) is setting aside $1.6 billion to cover potential costs from pending lawsuits, the credit-card processor said Friday. The funds add to about $2.7 billion the San Francisco company already has socked away to cover such expenses. Visa and MasterCard Inc. (MA) face more than 50 lawsuits filed since 2005 by merchants who argue the card processors have violated antitrust laws by fixing the fees retailers pay to accept their cards. The suits, brought by merchants including Kroger Co. (KR), Payless ShoeSource and Safeway Inc. (SWY), also name several large banks that issue Visa and MasterCard cards, including Bank of America Corp. (BAC), J.P. Morgan Chase & Co. (JPM), Wells Fargo & Co. (WFC) and Capital One Financial Corp. (COF). A trial date for the cases, which have been consolidated in U.S. District Court for the Eastern District of New York, has been set for September 2012 but analysts have speculated a settlement is likely to occur before then. A Visa spokesman declined to comment Friday. Visa said the funding of its litigation escrow dilutes the value of its Class B shares, which are held exclusively by U.S. banks, and has the same effect as repurchasing its Class A common stock. The company will fund its most recent deposit by exhausting its current $2 billion Class A repurchase program. Visa said in a November filing with the Securities and Exchange Commission the escrow account has an "uncommitted balance" of $2.7 billion, set aside "primarily with a view toward resolving the Interchange Litigation. Visa and MasterCard process the transactions made with their credit, debit and prepaid cards, which are issued by banks. Part of the fees merchants pay to accept cards, known as interchange, are set by Visa and MasterCard but collected by their partner banks as revenue. Merchants and banks have bickered over interchange fees for years, with retailers arguing the costs to accept cards have driven up the costs of goods. Card processors and banks argue such fees help cover the costs of processing transactions and blocking potential fraud. New rules that cut in half the amount of fees large banks can charge merchants for debit-card transactions took effect in October. The rules, which stem from a provision in last year's Dodd-Frank financial overhaul legislation, are expected to erase more than $6 billion in revenue for big banks. Visa's shares were up 0.5% at $101.07 in recent trading. -By Andrew R. Johnson, Dow Jones Newswires; 212-416-3214; andrew.r.johnson@dowjones.com
