First Data sues Visa; alleges anti-competitive practices
06 November 2002 | 4249 views | 0
First Data Corp has filed a counter suit against Visa alleging "anti-competitive and monopolistic practices that limit competition, innovation and choice in the payments industry".
Visa filed suit against First Data in April, attempting to block the expansion of processing credit card transactions through First Data Net, and in August added a ban on all private arrangements to authorise or to clear and settle transactions outside of VisaNet.
"For many years, Visa's rules allowed for private arrangements. But, when First Data began testing the first such meaningful arrangement, Visa abruptly changed the rule to prohibit all such innovations," says Eula Adams, senior executive vice president of First Data. "Visa has a track record of changing the rules when a rule no longer is in their best interest. In fact, Visa's chairman, Carl Pascarella, has publicly stated his view: if a rule is hurting us, change the rule."
First Data Net enables direct connections between merchant acquirers and card issuing banks, eliminating the need for transactions to pass through Visa. The card scheme insists that the rule changes are designed to protect banking member investments in the payments system
Adams dismisses the claims. "The suit that Visa filed against First Data in April 2002, and Visa's subsequent decision to completely ban all private arrangements, are efforts to stifle a competitive challenge - not to protect the payment system as Visa alleges," she says. "We feel strongly that in order to challenge the status quo and move the industry forward, we cannot accept Visa's anti-competitive and monopolistic actions."