EXCEEDING THEIR LIMITS?

December 8, 1998
		In a major anti-trust case, the U.S. Justice Department has accused the Visa and Mastercard in court of unfairly dominating the credit card industry and stifling innovation. Do the facts support the government's case?

Have Visa and Mastercard prevented the implementation of smart cards? Will this case change credit card interest rates or late fees? Will more stores now accept American Express, Discover and other cards? Is the anti-trust case improve consumer privacy? Does this case affect debit cards?     Nov. 26, 1998: A NewsHour background report on the government's antitrust case against Visa and Mastercard. Browse the NewsHour's business coverage

Paying with "plastic" has become as American as apple pie. United State consumers annually put $1.1 trillion on their credit cards, and a credit card number is usually the key to the emerging world of online commerce. More often than not, those credit card numbers by either Mastercard International Inc. or Visa USA Inc. Those two giants of the credit card industry account for 75 percent of the credit card business in the United States, and the vastness of those two credit networks have made paying with credit card almost as easy - if not easier -- as paying with cash. Visa and Mastercard's domination, though, may have a downside. U.S. Department of Justice lawyers have filed suit against the two, claiming the company's domination hurts consumers. Assistant Attorney General Joel Klein, the department's top antitrust lawyer, says the same group of banks sits on the boards of both Mastercard and Visa. According to the Justice Department, this arrangement then dampens competition between the networks, prevents member banks from dealing with other credit cards and limits the introduction of new technology. For instance, the suit alleges the introduction of "smart cards," cards with computer chips embedded inside, has been delayed almost a decade due to the lack of competition between Mastercard and Visa. Officials at both Mastercard and Visa dispute the Justice Department's claims and say the thousands of credit card offers arriving in consumers' mailboxes are evidence that competition exists in the credit card industry. Our forum asks: what does this case mean to consumers? Are the Justice Department's actions necessary? Will it improve consumer choice? Your questions on this topic are answered by Kevin Arquit, outside counsel for Mastercard International and Lloyd Constantine, an attorney that has filed a separate case against Visa and Mastercard.