To the Editor:

The Justice Department's credit card case ("U.S. Files Antitrust Suit Against Visa, MasterCard," Oct. 8, page 1) proves there is nothing new under the sun.

Apparently MasterCard and Visa are being charged with stifling competition by allowing duality within their member banks-the practice of offering both card brands to customers.

It is ironic that duality was, in fact, created by the Justice Department.

It was prohibited in the early days of bank credit cards, when banks issued either the nationally franchised BankAmericard (predecessor to Visa) or Master Charge (predecessor to MasterCard). That changed in 1976 following a suit brought against the two associations by Worthen Bank in Arkansas. Worthen argued that its ability to compete was hurt by not being allowed to offer both brands.

When the Justice Department ruled that banks should be allowed to offer both MasterCard and Visa, duality was born.

Although many banks did not support duality at the time, they were forced to offer both brands to remain competitive. In many cases, they offered duplicate lines of credit, which essentially doubled their contingent liabilities. Dual issuers also incurred the incremental marketing and operational expenses associated with membership and support of both brands.

I believe MasterCard and Visa both would have flourished in the absence of duality and no doubt would continue to do so if banks are forced to choose one or the other. But it is important to note that the member banks will be the ones to share the burden of the cost to undo the situation brought about by the Justice Department more than 20 years ago.

As for the other card programs-American Express, Discover, and others- their ability to compete with MasterCard and Visa is a product of their own business savvy and market targeting. In contrast to the alleged guerrilla tactics of Microsoft, MasterCard and Visa do not actively seek to destroy any perceived competition. Both associations have positioned themselves to market a family of bank card products for financial institutions, and those products are different from American Express and Discover.

Each brand has its own strength and audience. Although these audiences may overlap at times, it is unfair to say that MasterCard and Visa stifle competition. And if they have impacted competition, it has been done with innovative products in a free enterprise system.

Let's face it-American Express and Discover's original parent, Sears, have been around a lot longer than MasterCard and Visa. If they have missed opportunities to capitalize on their products, it is their own fault.

Stephanie Stephens Denny

Mesa, Ariz.

Editor's Note: Ms. Denny, an independent consultant, worked for 26 years in the bank credit card business, most recently with Bank of America.

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