Visa and MasterCard may have illegally colluded to monopolize the debit card business, according to documents released yesterday in the class-action lawsuit, representing five million retailers led by Wal-Mart, Sears, and Safeway.
This new filing accuses Visa and MasterCard of designing their debit cards to look almost identical to their credit cards in an attempt to confuse retailers about what they were accepting, hoping that this would lead to the merchants accepting the debit cards more frequently. Debit cards carry higher per-transaction fees than credit cards.
The suit is scheduled to go to trial in April, having been originally filed in 1996. If the retailers win, the suit could cost Visa and MasterCard as much as $100 million, according to some estimates.
The New York Times reports that yesterday’s court filing included “depositions, internal memorandums, letters, and meeting minutes.” The retailers are fighting back because of the card companies’ requirement that they accept the debit cards if they wanted to accept MasterCard and Visa.
Both Visa and MasterCard deny the charges, saying that there was no attempt to confuse the retailer and that it shouldn’t even matter, since both credit cards and debit cards are forms of payment, and that they are just creating an opportunity for “consumer choice.”
This new filing accuses Visa and MasterCard of designing their debit cards to look almost identical to their credit cards in an attempt to confuse retailers about what they were accepting, hoping that this would lead to the merchants accepting the debit cards more frequently. Debit cards carry higher per-transaction fees than credit cards.
The suit is scheduled to go to trial in April, having been originally filed in 1996. If the retailers win, the suit could cost Visa and MasterCard as much as $100 million, according to some estimates.
The New York Times reports that yesterday’s court filing included “depositions, internal memorandums, letters, and meeting minutes.” The retailers are fighting back because of the card companies’ requirement that they accept the debit cards if they wanted to accept MasterCard and Visa.
Both Visa and MasterCard deny the charges, saying that there was no attempt to confuse the retailer and that it shouldn’t even matter, since both credit cards and debit cards are forms of payment, and that they are just creating an opportunity for “consumer choice.”
- KC's View:
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The credit card companies’ assertion that it “shouldn’t matter” is ample evidence, in our opinion, that they both colluded with each other and are completely deluded about the difference between fair and unfair, the difference between right and wrong.
“Consumer choice?” What a load of nonsense.
Of course the cards are different. Which is why the credit card companies have spent millions of dollars marketing the debit cards to an unsuspecting public, using stars such as Kevin Bacon and Martin Sheen in their commercials, while at no time telling the public that use of the debit cards is more expensive than using a credit card, or even more expensive than using their ATM card as a debit card.
This costs the retailers more money in transaction fees. And ultimately costs the consumer more money, because retailers have to raise their prices to cover the fees.
Is public flogging a possible penalty in addition to having to write a $100 million check? Is so, the judge ought to impose it…because what the credit card companies have done in this case is reprehensible. (Guess we won’t be asked to serve on this jury…)
