States Probe Visa, MasterCard Debit Cards

A group of state attorneys general, including California’s, has opened an investigation into whether new debit cards being issued by Visa International Inc. and MasterCard International Inc. will harm competition.

Eleven states are examining “possible anti-competitive effects against regional ATM debit cards,” said Todd Boyer, a spokesman for Ohio Atty. Gen. Betty Montgomery.

Boyer said the states plan to step up their antitrust probe this month and issue requests for additional information from Visa, MasterCard and related companies. The states already are examining whether the companies barred member U.S. banks from offering competing credit cards.

Meanwhile, the Federal Trade Commission has been conducting a separate probe of whether Visa and MasterCard illegally require retailers who accept their credit cards to also take their debit cards.

A number of large retailers, including Sears, Roebuck & Co. and Wal-Mart Stores Inc., have already sued the two credit card issuers, alleging they are attempting to leverage their credit card monopoly into the rapidly growing debit card market.

The debit cards would compete against those that are part of ATM networks, including MAC, NYCE, Honor, Pulse and the Star System.

San Francisco-based Visa, the world’s biggest credit card company, said it hasn’t been notified by the states of an investigation into its debit card restriction. “We continue to think that Visa’s products and procedures are in consumers’ best interests because they promote choice,” Visa spokesman Kelly Presta said.

MasterCard, the No. 2 credit card company, couldn’t be reached for comment.