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Table of Contents

Lead Story

Redemption in recession

News

Industry Update

Companion bill targets interchange fees

And in this corner: Discover

MasterCard IPO soaring

FTC disconnects alleged phone card scam

Prepaid Expo coming to Caesars

Features

AgenTalkSM:
Neal Tichelkamp

Select-A-Branch grows ATM network

Travis K. Kircher
ATMmarketplace.com

Industry Leader

Jim Baumgartner –
Born to do business

Views

Honoring early mavericks

Patti Murphy
The Takoma Group

Education

Street SmartsSM:
Add value to enhance your value

Jason Felts
Advanced Merchant Services

POS as a second language

Dale S. Laszig
DSL Direct LLC

Portfolio sold: How much goes to Uncle Sam?

Michael Laird
Certified Public Accountant

Marketing mishaps to avoid

Nancy Drexler
SignaPay Ltd.

Little to fear in buyer's market

Lane Gordon
MerchantPortfolios.com

Company Profile

PayProTec

New Products

FACTA the future

Safe2Change
ID Insight Inc.

Protect data with hidden shield

VeriShield Protect
VeriFone

Inspiration

Dump perfectionism, do reality check

Departments

Forum

Resource Guide

Datebook

Skyscraper Ad

The Green Sheet Online Edition

June 23, 2008  •  Issue 08:06:02

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And in this corner: Discover

Discover Financial Services is seeking $6 billion in damages from an antitrust lawsuit the company filed against Visa Inc. and MasterCard Worldwide in October 2004. The suit followed a United States Supreme Court ruling that the top two card brands violated antitrust laws in limiting the ability of smaller organizations to expand during a period of enormous growth in the payments industry.

The damages, which could be tripled, were included in confidential filings unsealed June 9, 2008, in the U.S. District Court, Southern District of New York (Manhattan).

Discover's allegations go back more than a decade to when the U.S. Justice Department sued Visa and MasterCard on antitrust grounds for preventing their member banks from issuing credit and debit cards on rival networks.

In 2001, the Southern District Court of New York ruled in favor of the Justice Department and ordered both companies to eliminate said rules, allowing Discover and American Express Co. to solicit banks to issue cards on their respective networks. Subsequently, Discover and AmEx sued Visa and MasterCard in federal court, contending that the restrictive rules caused lost revenue and business opportunities.

The government findings indicate Visa and MasterCard "violated antitrust laws, so this case is about damages," said an industry analyst. In doing this, the analyst believes, Visa and MasterCard had market power that harmed competition, and as a result, Discover is after damages from profits that it was never able to realize.

Bigger slice of the plastic pie

To offset declining share prices since it was spun off in December 2006 by Morgan Stanley, Discover entered the debit card market, while AmEx is processing transactions on cards issued by financial institutions such as Citigroup Inc. and Bank of America Corp.

Unlike the top two card brands, which don't issue cards, Discover and American Express both issue cards and generate income for each transaction processed on their proprietary networks.

In October 2007, Visa agreed to settle with AmEx for $2.25 billion. Experts predict Discover's settlement will likely be for an amount smaller than what the company is asking.

Notice to readers: These are archived articles. Contact names or information may be out of date. We regret any inconvenience.

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Spotlight Innovators:

North American Bancard | Harbortouch | USAePay | IRISCRM.COM | Humboldt Merchant Services