Nyce files debit routing lawsuit against Concord
23 January 2004 | 3640 views | 0
Nyce Corporation has filed a lawsuit against Concord EFS for allegedly breaching routing agreements relating to debit card payments.
The suit, filed in Superior Court of the State of New Jersey, names current and predecessor operating entities of Concord, including Electronic Payment Services, Inc. (EPS) and Money Access Service Inc. (MAC).
The move to prosecute comes barely a month after First Data agreed to divest its 64% ownership stake in the Nyce debit card network in return for regulatory approval of its proposed purchase of Concord and its rival Star network. Neither First Data nor Concord have yet to comment on the suit.
Bank-owned NYCE charges that Concord has violated a 1993 agreement that allowed financial institutions that were members of Nyce and Concord debit networks to direct how POS transactions using their cards are routed. NYCE says that rules adopted by Concord after its acquisition of the Star network are in direct breach of this agreement. These rules require financial members to route their transactions over the Star network, even if the card issuer has designated that the transaction be routed to the NYCE network.
James Judd, NYCE's executive vice president says: "Concord has breached our agreement and is now interfering with issuers' ability to manage their card portfolios. We believe Concord's routing rules are simply anticompetitive and a clear violation of our prior agreement."
In 2003, 5.94 billion PIN POS transactions were conducted in the US as the number of debit transactions rose to rival those of credit cards. The Star network currently processes one in every two US PIN-based debit transactions.