Visa and MasterCard under DOJ Investigation

Visa and MasterCard under DOJ Investigation

Posted by John B. Frank Wednesday, November 5, 2008

Interesting week in the Payments Biz. American Express disclosed it's under DOJ investigation (DOJ "Steering Investigation Towards American Express), and MasterCard released it's 3rd quarter results. (MasterCard Shares Soar on 3Q Results) while disclosing, that it too, had received a request for information in October from the Department of Justice regarding rules related to merchant acceptance.

Now it comes to my attention that Visa and the DOJ are dancing as well. MasterCard included in its Securities and Exchange Commission filing that it, along with Visa, has been under investigation by the Department of Justice regarding the allegations of antitrust activity. MasterCard added that it is cooperating with the Justice Department in the investigation.

The Justice Department is seeking information that focuses on reasons merchants scale back their acceptance of certain cards, information on penetration rates by merchant category, cobranded cards and transactions in various countries, MasterCard said.

The credit card companies have not admitted fault and never will... despite the hefty settlements they have now agreed to pay to Discover and American Express.

The disclosure of the Justice Department inquiry comes a day after MasterCard said it lost $193.6 million, or $1.49 per share, during the third quarter as it took a $515.5 million charge related to a settlement agreement with Discover Financial Services.

MasterCard and rival Visa Inc. agreed last week to pay Discover up to $2.75 billion to settle an antitrust suit filed by Discover in 2004. The lawsuit claimed MasterCard and Visa had harmed Discover's business by preventing their member banks from issuing credit cards for Discover's network.

Visa said earlier in the week that credit card transactions growth slowed in September and "halted" in the first few weeks of October as the full weight of the economic crisis hit. But the credit card processor said that "debit use continued to grow at strong rates".

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