Visa Becomes Target of Investigation Over Debit Card Policy

Visa USA Inc. is being investigated by federal antitrust regulators concerned it may be stifling competition by preventing consumers from using its new debit card to make purchases through rival debit networks, industry officials said.

The inquiry is part of an expanded Federal Trade Commission probe into requirements by both Visa and MasterCard International that merchants that accept their credit cards must also honor their brand-name debit cards, the officials said. The rival debit card networks include MAC, NYCE, Honor, Pulse and the Star system.

Visa, the world’s biggest credit card company, and MasterCard, the second-largest, are already being sued for similar alleged debit card violations by large retailers such as Sears Roebuck and Safeway.

The new Visa debit card is “more expensive than anybody else’s online card. The only way they can get away with it is tying it to their credit card, where they have a virtual monopoly,” said Morrison Cain, senior vice president of government affairs for the International Mass Retail Assn., one of the groups suing Visa.

Kelly Presta, a spokesman for Visa International Inc., confirmed that the San Francisco-based company had been notified of an FTC investigation and that it received a subpoena for information. MasterCard spokeswoman Glynnis Woolridge said: “We are aware of the investigation. We are cooperating with the FTC inquiries.”

The agency broadened its investigation about the time of Visa’s May announcement that it was entering the online debit card arena, industry officials said. Banks are being told that if they opt for the card, they must remove the names of competing regional debit networks from the card.