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Archive for Tuesday, October 5, 2004

Banks no longer restricted on credit card offerings

October 5, 2004

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— MasterCard and Visa no longer can block banks from issuing credit cards from competitors after the Supreme Court declined to hear their appeal Monday.

Banks that issued MasterCard and Visa credit cards had been barred from also offering credit cards from other companies, such as Discover and American Express.

The Bush administration argued in court filings that removing the restriction would encourage competition and lead to more choices and, possibly, lower interest rates for consumers. The administration had won in district court and the New York-based 2nd U.S. Circuit Court of Appeals, which found the restriction was anti-competitive.

About 20,000 banks issue cards only through Visa and MasterCard.

American Express has been trying to persuade banks to issue its cards. Under the contested rules, banks would have to give up Visa and MasterCard cards to do that, and no U.S. bank has agreed, the court was told.

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