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, but rather it is a Visa policy that the federal government and Visa competitors contend allows Visa to develop and maintain its market share by stifling competition ("Is It a Carve-up" 73).
The Visa and Master Card systems are mutual organizations. The mutual structure means that the member banks and financial institutions that are members of the two systems also are the owners of the systems, e.g., each member bank or other financial institution holds an o...