To the Editor:
  The February commentary ("The New Competitive Challenges for Credit and Debit Cards") written by attorney David Balto misses the mark regarding payment card competition. Balto offers a series of incorrect statements that mischaracterize the industry and both the U.S. Department of Justice and
  merchant lawsuits. Allow me to correct the record.
  First, Balto is far off the mark in characterizing the importance of the DOJ litigation. His assertion that the major impact stemming from this ongoing litigation will revolve around banks being able to force networks to compete
  for their loyalty is incorrect. Mr. Balto knows that it was MasterCard's members who approved our Competitive Programs Policy, as it protected their investment in the network that enables them to compete with each other-as they compete with
  American Express-for cardholder loyalty.
  In reality, the key issue in this lawsuit is the ability of a joint venture to enact necessary loyalty rules to protect the assets of the joint venture from cherry-picking. What Mr. Balto fails to recognize is that without these
  protections and "rules," the benefits joint ventures bring to consumers-efficiencies, innovation, lower prices-are threatened.
  Second, Balto's interpretation of the recent class-action settlement between merchants and MasterCard was blatantly wrong. He incorrectly refers to the monetary component of the settlement of this lawsuit as an "award."
  There was no jury trial, and no finding of liability, let alone any award of damages.
  This lawsuit was resolved prior to trial by a settlement between MasterCard and the merchants. The final settlement agreement, which was for a fraction of the damages plaintiffs were originally seeking, preserves important
  consumer benefits of MasterCard's honor-all-cards rule, while giving merchants flexibility to choose how broad a range of payment choices to offer their customers.
  Noah J. Hanft
  General Counsel
  MasterCard International
  Purchase, N.Y.

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