Friday , December 13, 2024

No Clear Reading on Visa’s Penalty Policy Toward MasterCard

Payment executives shouldn't read too much into the legal interpretation of a recent policy decision by Visa to exempt its members that switch their debit card portfolios to American Express or Discover–but not MasterCard–from paying exit penalties. In a letter to members, Paul Allen, Visa executive vice president and general counsel says Visa has been advised that if it exempted American Express and Discover from its bylaw, it would satisfy the concerns of the Justice Department's Antitrust Division. But David Balto, a Washington, D.C., attorney and former counsel for the Federal Trade Commission who has studied anti-trust issues related to card payments, says observers “should not conclude that Visa has been given the green light on its policy relating to MasterCard.” Balto says it appears that Visa was told that in order to comply with an order from a federal court relating to an anti-competition lawsuit filed by the Justice Department, Visa specifically could not prevent members from issuing Discover or American Express cards. That court decision did not address any policy that would preclude members from switching Visa cards to the MasterCard brands. “There are still significant anti-trust issues that need to be addressed with regard to this policy,” Balto says. MasterCard has already filed for an injunction to stop Visa from fining members that switch debit cards to the MasterCard brand. That case is still pending.

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