A federal judge has ruled that Visa USA, the largest U.S. credit card group, must stop charging a special fee when a big debit card client jumps to rival MasterCard.
Shares of MasterCard , which had been up 2 percent, rose further after the company issued a statement on Thursday's ruling by Manhattan federal judge Barbara Jones.
The judge agreed with a special master that the fee violated a 2003 settlement of claims by Wal-Mart
According to the judge's 41-page opinion, Visa decided to assess a "settlement service fee" to any of its 100 largest debit issuers that moved its debit portfolio to MasterCard. The fee was to represent the issuer's proportionate share of Visa's remaining obligations under the settlement.
"The court agrees with the special master that, because banks make the brand-switching decision 'at the margin,' the settlement service fee is large enough in relation to MasterCard's incentive package to effectively prevent a bank from switching," Jones wrote.
Jones also required Visa to allow any of the 100 issuers who signed agreements with Visa while the fee was in place to terminate those agreements, so long as the issuer has entered into an agreement to issue MasterCard brand debit cards.
"This is a significant win," MasterCard General Counsel Noah Hanft said in a statement. "With this roadblock out of the way, financial institutions (can) make decisions based on their best judgment about quality of service, strength of brand and other competitive factors."
Visa USA Vice President Rosetta Jones said her card association is studying the ruling and may appeal.
MasterCard is based in Purchase, New York, and Visa in San Francisco.
In afternoon trading, MasterCard shares were up $4.28, or 3.1 percent, at $143.69, after earlier rising to $147.14