VISA'S NO-COMPETITION POLICY

VISA'S NO-COMPETITION POLICY FOR MEMBER BANKS: AN ARGUMENTATIVE ESSAY AGAINST THE VISA ORGANIZATION'S POLICY

This essay argues against the Visa organization's policy that prohibits banks and other financial institutions that are members of the Visa system from issuing and processing payment cards issued by competitors other than Master Card. The United States government charges that Visa and Master Card function, in effect, as a single competitor (Donovan A2).

Visa is the world's largest branded payment system. The Visa system, along with other credit card organizations, provides consumers and merchants with a relatively easy process to pay and be paid. The Visa system includes more than 14,000 affiliated banks and other financial institutions. More than 22 million merchant locations accept the more than 353 million Visa payment cards ("Visa Payroll Card" 137). Card payments in the United States exceed $1.3 trillion annually ("Is It a Carve-up?" 730. For all the value that Visa creates for consumers and merchants, however, the United States government, the European Union, and Visa competitors charge that Visa's anti-competitive activities harm consumers (Donovan A1).

Visa has a 47 percent share of the payment card market, while its virtual partner, Master Card, has a 28 percent market share, and all other competitors together have a 25 percent market share ("More Competition Is in the Cards" 60). The basis of the charge against Visa is not its market share per se, bu

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al institutions from issuing and processing payment cards from card issuers other than Visa and Master Card ("Visa and Master Card Ordered to Allow Rival Cards at Banks" C17). Both Visa and Master Card are appealing the ruling that they cannot prohibit member banks and other financial institutions from issuing and processing payment cards other than those issued by Visa or Master Card ("More Competition Is in the Cards" 60). In arguing either against the Visa policy or in favor of the Visa organization, many people cite parallels between the Visa case and the antitrust case brought by the federal government against Microsoft. The federal government's antitrust case against Microsoft charged that provisions of the contracts between Microsoft and computer manufacturers and so-called "white-box" computer resellers stifled competition by demanding the installation Microsoft software applications to the exclusion of competing products on all machines with Microsoft operating systems installed. As the operating systems installed on 90 percent of the computers sold are Microsoft Windows operating systems, computer manufacturers and white-box computer resellers have little choice other than accepting the contract terms set by Microsof

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