Visa Inc (NYSE:V), the world’s largest card issuer, is facing legal challenge from Discover Financial Services (NYSE:DFS) over its anti-competitive debit card practices. The debit card network company is seeking settlements for loss of profits caused by Visa’s debit-card practices.
According to the lawsuit filed by Discover Financial Services, Visa is “undertaking illegal behavior to fend off competitive threats to its debit network services monopoly.” The lawsuits further added,
“In order to maintain its monopoly, Visa has undertaken a series of illegal actions that undermine competition – harming rival debit networks, merchants, acquirers, card issuers, and consumers.”
Discover Financial Services (NYSE:DFS) issues debit cards through its Pulse Network LLC unit, which requires its customers to use a PIN for transaction validation whereas Visa Inc (NYSE:V) relies over customer signature. The petition filed by Discover mentioned that Visa is already offering incentives to the merchants for choosing its network. This is not the first time when Visa Inc (NYSE:V) has been accused of practicing anti-competitive policies.
The U.S. financial-overhaul law made it mandatory for financial institutions to use at least two payment processors for their debit cards, which would put the choice in merchants’ hands making it equally available opportunity for payment networks. Discover Financial Services (NYSE:DFS) has accused Visa of offering financial incentives to the merchants agreeing to use its services over the competitors.
Visa Inc (NYSE:V) said that the company is reviewing the lawsuit and declined to answer about the further course of action. Discover Financial Services (NYSE:DFS) is not the only payment processing network affected by the policies of Visa. The primary players in payment processing include Discover Financial Service, Mastercard Inc (NYSE:MA), American Express Company (NYSE:AXP), and Visa.
The case is filed in the U.S. District Court of Southern District of Texas, Houston Division.
This article has been written by Prakash Pandey.