Mastercard seeks separate US hearing to Visa
Retailers press anti-trust suit
March 16 2002
Mastercard has applied for a separate US trial from arch-rival Visa as the two credit card giants prepare to fight an antitrust case spearheaded by Wal-Mart.
In all, five million US retail outlets are part of the lawsuit, initially bought by Wal-Mart in 1996 and later joined by retailers including Sears, Roebuck and US supermarket operator Safeway Inc.
The retailers claim that Visa and Mastercard used their market dominance to see off smaller debit card operators, leading to higher fees for retailers, and increased costs for consumers.
The retailers argue that Mastercard’s latest move is a delaying tactic. Their lawyers said Visa and Mastercard have used a common defense throughout the trial and should be considered together because they are essentially owned by the same banks, all of which issue or have issued both brands of cards.
The case centres on Visa and Mastercard’s “honour all cards” policy, which means retailers accepting their credit cards must also accept debit cards. Retailers claims the debit cards are less secure, since unlike US credit card transactions they do not use a PIN system. They also say the fees of about $1.50 per $100 are too high. MasterCard has said it promoted PIN in the early 1980s, but retailers would not invest in the necessary hardware.
The case is due to be heard in New York at the end of April. An earlier application by Visa and Mastercard, arguing that the huge number of retailers with a potential claim under a class action suit made the case unmanageable, has yet to be ruled on.
