TCF Re-Ups with Visa

After an acrimonious summer in which TCF Financial Corp. first complained about the costly Visa/MasterCard settlement in the Wal-Mart case, and then complained even more bitterly when Visa threatened to levy a penalty on TCF if it switched debit brands, the Minneapolis-based bank has come to terms with Visa and will issue under its debit card brand for 10 more years. TCF Chairman William Cooper was upset when the April settlement with merchants led by Wal-Mart Stores Inc. cut interchange income from signature-based debit cards by one-third. TCF, which primarily issues debit cards, processes more than $800 million in quarterly volume on the plastic. Cooper reasoned the settlement terms imposed an unfair cost burden on debit-heavy issuers like TCF. When the bank sought bids from other debit brands, Visa sent Cooper a letter this summer pointing to a bylaw amendment quietly passed in June that exacts a financial penalty from any top 100 Visa check card issuer that switches to another brand or allows a major drop in its check card volume. MasterCard in September filed a motion seeking to stop the penalty, charging that it is anticompetitive. The letter infuriated Cooper, who went public with charges the penalty was “outrageous.” The fee to TCF would have been as much as $20 million. Visa countered that the measure was necessary to make sure members didn't evade responsibility for shouldering part of the burden of the Wal-Mart settlement, which cost the card network $2 billion. Now, though, it appears all is right between the bank and Visa. TCF says Visa's bid offered the best terms, and the bank wanted to settle an issue that is so intimately bound up with its core checking-account business.