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Paycomm Billing files MasterCard lawsuit; Visa faces patent theft charge

13 May 2003  |  5689 views  |  0 Paycomm Billing files MasterCard lawsuit; Visa faces patent theft charge

Paycom Billing Services, an Internet payment service provider, processing credit card and cheque transactions for online merchants, has filed a multi-million dollar lawsuit in Federal Court in Los Angeles against MasterCard International for antitrust violations, fraud and other issues.

Paycom's suit alleges that MasterCard has established monopolistic rules that allow it unreasonable discretion to dominate Internet merchants, and it has exercised this power to illegally impose fines and penalties in the millions of dollars.

Under MasterCard's rules, online merchants can pay up to four times as much as traditional retailers to accept credit card transactions.

Former Federal prosecutors for the US Department of Justice, William Miller and Richard Crane, of the Los Angeles law firm Musick, Peeler & Garrett LLP and Dennis M. P. Ehling, filed the lawsuit on behalf of the plaintiff.

Crane states: "A United States Federal District Court has already determined that MasterCard is a monopoly. MasterCard's continued unfair dealings and the imposition of baseless fines, penalties and fees on Internet merchants, such as Paycom, simply prove the abusive control that one finds in a monopoly."

Paycom's chief executive officer, Christopher Mallick, comments: "We are in compliance with MasterCard's rules as a merchant, yet they fine us millions of dollars. Paycom has been directed to change its entire business structure, indeed to change the way in which E-commerce works, to comply with additional rules from MasterCard; rules that MasterCard cannot or will not articulate or explain."

He says the rules are unreasonable and "demonstrate MasterCard's intent to continue to economically bully Internet merchants".

Separately, Starpay.com, of Oklahoma, and VIMachine, of Delaware have begun litigiation against Visa, claiming that the card scheme stole their patented authentication technology for online transactions.

Ironically Paycomm has not filed suit against Visa because it says the company has made more effort to stem online fraud and cut down on chargebacks to merchants and processors.

The litigation is the latest in a spate of lawsuits and anti-trust investigations against MasterCard and Visa, which recently agreed a $3 billion out-of-court settlement with US retailers over excessive debit card charges.

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