his is my final article in this round of "Knowledge is Power" articles, and I want to take this opportunity to weigh in on the much-discussed subject of the Wal-Mart, et al. v. Visa litigation about honoring the Visa Check card (MasterCard is also a defendant).

Candidly, I think this litigation is a good example of many things that are wrong with our civil justice system as well as the current version of capitalism in 21st century America. Setting aside all of the legal contortions and "arguments," this lawsuit is about as reasonable as the lawsuits against McDonald's for "too hot" coffee and "too fat" food.

From a bird's-eye view, trying to understand simple right and wrong, this lawsuit appears to be another case of someone trying to use the legal system to get something for nothing, and that someone is Wal-Mart. When you step back and look at the tort system in America, many of us who earn our livelihoods as capitalists are outraged at its abuse by lawyers motivated by large fees and plaintiffs who want something for nothing. Did you know that the tiniest of new public companies pay almost one million dollars per year for their directors' and officers' insurance? Why? Because of the increased possibility of getting sued by plaintiffs' attorneys in class-action lawsuits at the drop of a hat. This kind of stuff costs our entire economy a fortune and seriously impairs the growth of America's productivity.

What manufacturers have been forced to endure with unreasonable product-liability claims and what our doctors and hospitals are forced to fight with outrageous malpractice settlements has now been visited upon the bankcard acquiring industry. Lucky us. We can thank Wal-Mart for dragging our entire industry into the muck in what is already a huge waste of time and money. Nothing of long-term value to our industry is going to come out of this litigation. No matter what happens, I am confident that the banks are going to continue to cover their costs and earn a profit from their card products and that Wal-Mart is going to continue to be unhappy.

The most aggravating and unfair aspect of this, in my view, is that virtually every single merchant in America has joined as a plaintiff with Wal-Mart in this case. For millions of these merchants, PIN-based debit transactions are impossible or excessively expensive. The business of millions of merchants has been improved because Visa created this ingenious card that can be used as both a signature-based vehicle or as a PIN-based vehicle to access funds deposited in DDA accounts of millions of cardholders, some with and others without Visa credit cards.

The Visa Check card has played a significant role in the prosperity of a vast percentage of America's merchants because millions of Americans could use a Visa product for the first time, and the card was always available after payday in spite of cardholders' balances on their credit cards. The growth in electronic payments has been from Visa Check cards and all of the merchants, acquirers and ISOs have benefited from this growth, not to mention the cardholders, who obviously love it.

The Visa Check card is an ingenious product because it has most of the advantages of a credit card as well as all of the advantages of a PIN-based card. The cardholder can purchase products over the Internet or over the telephone just as with a credit card but also has the advantage of using it at an ATM or at the grocery store to pay the bill and get cash back, all in a single transaction.

For the merchant, the Visa Check card has been enormously valuable because each individual merchant is able to decide whether to pay for the cost of accepting PIN transactions and to determine if PIN transactions are practical at all. This flexibility has increased the value of electronic payments with merchants and ended all debate about the future direction of check and cash payments in this country.

And the best part for all parties is that this product has worked well for both the merchants and the cardholders because no infrastructure changes were imposed on anyone! How many products have caught so much traction and benefited so many in such a short time? We should be celebrating the success of this product but instead are forced to wade through the muck of another counterproductive round of massive litigation.

Although PIN transactions are ideal for certain types of merchants, online debit transactions are impractical and/or impossible to process for almost half of the merchants who are plaintiffs in this litigation.

For example, when was the last time you purchased services or products over the telephone or on the Internet with your PIN-based debit card? And when was the last time you paid a hotel bill or rented a car or paid for an airplane ticket with a PIN-based debit card? Probably never. And how about the last time you went to a fine dining restaurant or went to the barbershop or beauty salon and paid your tip-adjusted check with a PIN-based transaction? In much of America, it is considered a faux pas to inform the server of his/her tip before paying the bill.

There has been a lot of discussion and multiple efforts for more than a decade to deploy a table-based wireless terminal in America's fine dining restaurants. This has become common practice in parts of Europe. But this is America, and we no longer care how the French do much of anything!

The fact is that tipping in France, where table-based payments have gained popularity, is not a practice with about 50% of the consumers. U.S. patrons are more generous to their restaurant servers than Europeans are because we know that tips are a major portion of the servers' income (which is not the case in France, where servers' salaries are slightly higher and the tip usually is included in the bill).

And then there are those million or so merchants who don't do enough business to justify the cost of buying the equipment required to take PIN-based debit. Millions of merchants process fewer than five electronic transactions per day. Who wants to pay for the cost of a PIN pad and upgrading it every time the encryption requirements change when they would take only a few PIN-based debit transactions each month? And we haven't even discussed the counterspace and inconvenience of the PIN-entry process.

What about those small-ticket merchants for whom PIN-based debit transactions are more expensive than offline debit? Almost all of the examples I have seen comparing the "high cost" of offline debit to PIN-based debit use an average ticket of $100. It's well-known that debit transactions - both offline and PIN - replace cash and checks and have a significantly lower average ticket than credit transactions.

It is just not honest to use a $100 average ticket to compare the costs of these transactions. PIN transaction fees often run as high as 25 or 30 cents. That is 2.5 or 3% on a $10 average ticket. Is it more or less expensive for a convenience store or movie theater or gas station or movie rental store to accept PIN or offline debit? The answer is that offline is cheaper for the hundreds of thousands of small-ticket merchants.

And then there are the large-ticket merchants such as furniture stores and new car showrooms and art galleries and antique stores and hard-goods dealers and transmission shops that take lots of credit cards but very few debit cards of either kind.

Consumers like to use their debit cards to pay for the normal day-to-day items, such as gasoline and groceries, but they like to use their credit cards to earn points and take some time to pay for larger, non-routine purchases. Large-ticket merchants are not impacted in the same way by debit cards as businesses such as Wal-Mart are. Do they all have the same needs or interests of Wal-Mart? I think not. Yet they are joined at the hip in this litigation.

There are lots of merchants who can't possibly take debit and still more who cannot justify the cost of the equipment, not to mention those who pay more to accept PIN-based transactions. Yet virtually every single one of these Visa and MasterCard merchants can take an offline debit card with no aggravation whatsoever.

These merchants have no argument whatsoever against the versatile, offline debit card, yet these millions of merchants have all joined in suing Visa and MasterCard hoping for their share of billions of dollars of "damages" that they have never suffered. Many of these merchants pay 2.75% or more to American Express for accepting its card, but American Express is not being sued for making "excessive profits."

I suspect that the great majority of these businesspeople are pretty sick of the tort system in America, where a plantiff's lawyer can be found on every street corner advertising for "victims" of product liability, malpractice, hot coffee, asbestos, stockbroker irregularities, and directors' and officers' malfeasance. Many of those who form the business backbone of this country are not being intellectually honest if they willfully joined in this litigation. These millions of capitalists have suffered no injury from offline debit and, in fact, have benefited enormously.

Frankly, I don't think the vast majority of these merchants even know they have joined in with Wal-Mart, and many would be furious if they realized that the class-action lawyers for Wal-Mart have automatically made them a plaintiff unless they took the trouble to read their junk mail and opt out of the litigation on very short notice. What kind of a system automatically makes you a plaintiff in a lawsuit unless you opt out? Hello? If you aren't as riled up about this as I am, let's consider the pot that is calling the kettle black. It is preposterous and an intellectual fraud that Wal-Mart, of all companies in the world, would claim damages against Visa and MasterCard for improper business conduct. Wal-Mart is fast becoming one of the most despised companies in America, and its arrogance has made it a classic abuser of economic might.

Wal-Mart has used almost every trick in the book to force competitors out of business, to coerce its suppliers to give concessions that it has not earned, to treat its employees as if they were 19th-century servants without fundamental worker rights and to behave improperly in avoiding payment of valid claims by consumers injured in its stores and parking lots.

And just who had the evil hand that coerced Wal-Mart into accepting Visa cards in the first place? Wal-Mart burned a lot of calories to get Visa to create a special pricing category for billion-dollar-plus merchants, knowing all of the Visa rules when that negotiation was taking place.

No one forced Wal-Mart to start accepting Visa and to sign the "honor all cards" contract with Visa. It entered into the contract to accept Visa cards after intensive work and with complete knowledge of what it was doing. What brand of victim capitalism is Wal-Mart trying to invent with this litigation?

And who is rising up to protest this travesty? It sure isn't the millions of merchants who have joined in the litigation to get a slice of the pie. It sure isn't any of the industry trade press or trade associations. Is every single player in the industry afraid to speak up, or doesn't anybody care? Wal-Mart suing Visa and bringing along millions of merchants in a class-action lawsuit is reprehensible.

Wal-Mart and its large brethren are seeking to gain a "settlement" from the bank members of the associations, and they may succeed in the short term in getting a lump of cash or a reduction in check card interchange. But it's the banks who issue the cards, have the checking account relationships, facilitate and/or finance the purchases at Wal-Mart and take the risks of card issuance.

The banks may lose this battle, but in the long run they will win this war and Wal-Mart will have a short-lived and phyrric victory. Wal-Mart seeks redress in the courts for an issue over which it has total control. There's a lot more, but I'm outta space.

Bob Carr is the Founder, CEO and Chairman of Heartland Payment Systems. To learn more about Heartland Payment Systems, visit www.hpsteammates.com or www.heartlandpaymentsystems.com, or e-mail Bob at Bob.Carr@e-hps.com.