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Discover Sues Visa
Tuesday, December 2, 2014 6:35 AM

Discover Financial Services, through its Pulse Network LLC, filed a lawsuit in federal court on Nov. 25 accusing Visa Inc. of anticompetitive practices in its debit-card business.

Discover contends that Visa, the largest credit-card company in the U.S., is "undertaking illegal behavior to fend off competitive threats to its debit network services monopoly" and that it is an unfair advantage that Visa can require issuers of its debit cards to only use Visa's PIN services, rather than allowing other competitors, such as Pulse from Discover, to compete for the business.

In 2010, an overhaul of the U.S. financial system included a regulation that required financial institutions to feature at least two processing networks on each debit card so that merchants could rout transactions to their networks of preference. 

Discover believes that Visa is offering merchants—especially those that process large numbers of transactions—monetary incentives if they agree to send all debit transactions to the Visa debit network.

The lawsuit is not the first filed against Visa with accusations of anticompetitive practices. This case is Pulse Network LLC vs. Visa Inc., filed in U.S. District Court of Southern District Texas, Houston Division.