Discover Sues Visa Over Debit Card Practices
Discover Financial Services is suing Visa Inc for using anti-competitive practices in its debit card sector. The company alleges Visa has “undertaken a series of illegal actions that undermine competition–harming rival debit networks, merchants, acquirers, card issuers, and consumers.”
Discover is seeking compensation for its losses as a result of these anti-competitive practices. According to the report, Visa requires a signature for most of its purchases, not a PIN like Discover and other card companies require. As a result, Visa is able to maintain a stronger hold on the market.
Discover is also alleging that Visa is offering incentives to merchants to choose their network to process transactions.
Other reports indicate Visa has imposed a rule preventing financial institutions from providing signature debit cards from any other networks after they work with Visa. This prohibits companies like Discover from getting access to any of the sales those financial institutions may provide. Visa is using its already strong standing in the market to ensure that it holds its market share. Visa is the largest processor of card transactions in the United States.
The Federal filing last week said, “Compared to how the marketplace would have–and should have–evolved post-Durbin, Visa’s actions have resulted in higher profits for Visa, higher prices charged to merchants, acquirers, and issuers, higher prices for consumers, and less debit network volume and reduced competitive viability for rival PIN debit networks.”