Visa and Mastercard face DoJ case

The US Department of Justice has accused MasterCard and Visa of stunting the development of smartcard technology.

The Attorney General, Janet Reno, made the accusation as she announced an anti-trust investigation would be launched into the activities of the two companies. She maintained they had forced participating banks not to issue cards from competitors like Amex.

Analysts have reacted sceptically to her claims, suggesting a number of reasons why smartcards have not taken off in the US but adding that the dominance of the two credit card companies has little to do with it.

Dave Birch, director of ecommerce consultancy Hyperion, said: "It might have a lot to do with the telecoms infrastructure in the US. It's cheap and easy to do online transactions. There's a clearer business case for smartcards in Europe because they reduce fraud."

Richard Poynder, chairman of professional association, the Smartcard Club, said: "The US has been slow to adopt the EMV (Europay/MasterCard/Visa) standard which has led to retailers not having readers. But I don't see how on earth that can be Visa and MasterCard's fault. The fragmented banking structure in the US has made it difficult to implement anything like a smartcard programme on a national basis."

Visa and MasterCard have vigorously denied charges of anti-trust behaviour. They have not answered the accusation of slowing down smartcard development, but MasterCard has stated its commitment to the technology in the past.

Richard Ballimore, senior vice president of the company's chip card business unit, commented: "By the year 2010, we expect all of MasterCard's credit and debit cards will be chip based."