NEW YORK — Credit card companies could find themselves amazed at the size of their own bills if a landmark trial set to begin in Brooklyn federal court today doesn’t go their way.

Although seven years in the making, the closely watched case has taken on new significance in recent years as use of debit cards has grown exponentially.

With potential damages reaching to between $39 billion and $100 billion, the trial pits two huge industries — retailing and banking — against each other and promises to shed light on the processes by which consumers access credit and retailers are charged for both credit and debit services.

Wal-Mart Stores and Limited filed their lawsuit in 1996 against Visa USA and MasterCard International, alleging that the card services violated antitrust laws by tying their debit cards to their traditional credit services. Essentially, under the so-called "honor all cards" rule, a merchant who accepts a Visa or MasterCard credit card is obligated to also accept the card association’s debit card.

Others have since joined in the lawsuit: Sears, Roebuck & Co.; Safeway; Circuit City; Burlington Coat Factory Warehouse; the International Mass Retail Association; the National Retail Federation, and the Food Marketing Institute.

In addition to alleging that the credit card-debit tying arrangement was illegal, the retailers charged that Visa and MasterCard attempted and conspired to monopolize the debit card market. They also said that because of the tying arrangement, Visa and MasterCard were able to charge higher fees for use of the debit cards, despite lower costs and risks, than those of credit cards.

Barring a last-minute settlement, the trial is expected to last three months.

As lawsuits go, this antitrust action has certainly attained mega status. More than 400 depositions — question-and-answer sessions as part of the routine evidence-gathering techniques used in preparation for trial — were taken, according to sources familiar with the case. In comparison, depositions in the Microsoft antitrust action were reportedly under 75. Moreover, documents sifted through by lawyers for both the retailers and the card associations are said to be in the millions, possibly as many as there are class-action plaintiffs.

Judge John Gleeson, the Brooklyn federal court judge overseeing the case, classified the lawsuit as a class action in 1997. Since then, more than five million merchants have joined the class. Virtually all merchants, even those no longer in business, can be included in the class as long as they have accepted a Visa or MasterCard in the last 10 years.The lawsuit centers on the fees that are charged for two different debit transactions: off-line, requiring a signature in the same manner as a credit card charge, and online, requiring a user to punch in a secret personal identification number at a point-of-sale box. Funds are transferred to the retailer’s account several days later in the offline method, but that time frame is shortened to 24 hours or less when using the online procedure.

The difference might not be all that meaningful to consumers, but it is for the retailers. According to a spokesman for the class-action plaintiff merchants, "Acceptance of signature-based debit cards costs merchants on average $1.54 per $100 transaction, in comparison with just 12 cents per $100 transaction when PIN pads are used."

The use of debit cards by consumers has been increasing steadily each year, with more PIN pads being installed year after year at merchants such as supermarkets, gas stations and drugstores. According to Visa, its own debit volume in 2002 rose to more than $1.1 trillion, an 18 percent increase over 2001. And MasterCard has said that the number of times consumers used PIN debit cards grew by 39 percent in 2002 over 2001’s volume.

Tracey Mullin, NRF’s president and chief executive officer, said in a statement earlier this month that one impact from the processing cost disparity is that it "artificially inflates the price of almost every product sold."

The original complaint said that there were 1.2 billion retail transactions in 1996 involving the VisaCheck or MasterMoney debit cards, totaling $46 billion. The fees on these transactions were $580 million. Had the retailers been able to refuse the Visa and MasterCard debit cards and have customers use another form of payment, such as cash, check or other credit cards, the costs incurred by retailers would have been only $90 million.

Lloyd Constantine of Constantine & Partners, lead counsel for the merchants, said, "Prices for merchants and consumers should be $100 billion less over the next decade if we are successful. Visa and MasterCard will be forced to change their monopolistic practices and stop squeezing every last penny of their hidden tax on consumers who shop at stores forced to accept off-line debit transactions at inflated prices."Noah Hanft, general counsel for MasterCard International, said in a recent statement, "The ‘honor-all-cards’ rule has resulted in American consumers having the broadest range of payment choices in the world. We’re confident that once the jury has evaluated all the evidence, it will uphold this pro-competitive rule and protect this critically important consumer benefit."

Hanft has charged that the merchants are attempting to use the antitrust laws to "take the choice of how to pay away from the consumers and claim it for themselves."

Financial sources said that Wal-Mart is in the hunt for a bank it can purchase, with the intent of issuing its own cards using its own proprietary debit network. A Wal-Mart spokesman said he was aware of no such interest on Wal-Mart’s part.

According to a joint "Debit Issuer Survey" study released last August by Dove Consulting and Pulse, an electronic funds-transfer network, only 26 percent of financial institutions impose a fee for online transactions on all or part of their debit cardholders. The fees range from 25 cents to $1. More importantly, so far, none of the card issuers surveyed imposed transaction fees for offline debit purchases.

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