P. M. BRIEFING : 12 States Sue Visa, MasterCard

Twelve states including New York and California filed suit in Manhattan federal court today charging the Visa and MasterCard companies with conspiring to monopolize the potentially multibillion-dollar debit card market.

The two companies allegedly undermined competition through a joint venture, called Entree, and by acquiring the nation’s two largest automated teller machine networks, New York Atty. Gen. Robert Abrams said. The two ATM networks, Cirrus System Inc. and Plus System Inc., formulated their own plans for national debit card networks in the early and mid-1980s, Abrams said.

Visa also took over the West Coast-based Interlink Network, the nation’s largest regional debit card network.

A debit card is used like a credit card, but the money is automatically transferred from the cardholder’s account to the merchants.

Visa and MasterCard signed an agreement in 1987 to jointly introduce Entree. More than 177 financial institutions have joined Entree, and 1.4 million Entree ATM cards have been issued. But the two companies have not introduced the program to merchants, Abrams said. He said the companies have apparently chosen instead to continue to promote their highly profitable credit card business.