Mastercard Member Banks Barred from Offering Competing Cards
Christian Plumb Bloomberg Business News, THE JOURNAL RECORD
NEW YORK -- Mastercard International Inc. broke with its historic practice, joining Visa International Inc. in adopting a policy barring banks that issue its cards from offering American Express or other competing cards.
Visa, the other major bank credit card association, has had a similar policy since 1991.
Mastercard's board voted the ban two months after American Express Co. went public with a year-long, so far unsuccessful, effort to convince banks to issue its charge and credit cards.
"The (Mastercard) global board has been looking at this issue for some time but this specific policy was in response to the American Express policy inviting member banks to participate in its network," acknowledged Mastercard spokesman Sean Healy.
The Mastercard ruling applies only to cards issued in the United States, and the board doesn't plan to issue any similar non-compete rule for its member banks outside of the U.S, Healy said.
Last month, the Justice Department launched a probe of the Visa ban, which Visa was forced to cancel for banks in Europe, after a European Union official called it "unacceptable."
Justice Department spokesman Gina Talamona wouldn't say whether Mastercard will be added as a target of the probe. Healy declined to comment on whether Mastercard officials were concerned about the Justice Department inquiry.
Visa's five-year-old prohibition has made it difficult for American Express and Discover card issuer Dean Witter Discover & Co. …