Discover Financial Services has sued Visa Inc under allegations that the company’s credit credit card business has engaged in anti-competitive practices.
Discover Financial is looking for compensation for lost profit because of these alleged anti-competitive practices.
Discover, based in Riverwoods, Illinois, claims that “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’s PULSE, one of the nation’s leading ATM/debit networks, requires its debit cardholders to authorize transactions with a personal identification number (PIN). Transactions with Visa on the other hand only use a customer signature.
The lawsuit points out that “Visa has a long history of making sure that PIN debit does not predominate, including undertaking illegal behavior to fend off competitive threats to its debit network services monopoly.”
Discover Financials claims that Visa offers businesses economic incentives to use its network over others for transactions if these merchants agree to send all of their debit transactions over the Visa debit network.
Discover is challenging a Visa rule that requires financial issuers of Visa signature debit cards to also include Visa’s PIN services rather than allow PIN networks, such as Pulse, compete for that business.
Visa is America’s largest processor of card transactions, competing with the likes of MasterCard Inc., Discover Financial, and American Express Co.
The case is Pulse Network LLC v. Visa Inc in the U.S. District Court of Southern District of Texas, Houston Division. Case: 4:14-cv-03391.
