To the Editor:

The Justice Department comes across as misguided in its lawsuit against MasterCard and Visa ("Bankers Fear Loss of Ability to Offer Both Visa, MasterCard," Oct. 13, page 1). It is almost as if the government knows something is wrong but is not sure exactly what.

Justice may feel it needs to use market share criteria in order to establish a monopoly, but it is clear that the major competitors are the card issuers, not MasterCard and Visa. (And they are the ones with the most impact on consumer prices.)

This market, overall, is characterized by rapid concentration, more rapidly declining profitability, consumer indifference to the brand names despite millions of dollars of advertising, and declining loyalty to card issuers.

This industry is generating a blizzard of mail solicitations, a card-to- customer ratio approa-ching 5 to 1, huge unused credit lines, an inability to settle on necessary standards, and two bureaucracies that are more interested in their own welfare than that of their owner banks.

Justice has a good shot at eliminating interlocking relationships and an even better chance of breaking the prohibition against American Express and Discover issuance by banks. There is a good chance it can alter interchange pricing and unbundle branding and processing but almost none that it can unwind duality, which would be an unholy mess.

It is far too late to displace the Visa and MasterCard credit brands, but open competition among various processors, clearers, and settlement systems would be beneficial to all.

What is clear is that banks will be in deep trouble if they allow their associations to dominate debit or deposit-access branding the way they did credit cards. Banks should be making every effort to establish that they, not Visa/MasterCard, are the important competitors.

They can do that by adopting a common debit acceptance mark that allows individual bank brands to flourish.

Joseph E. Wallace

Director, System B DivisionChicago

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