InComm Responds to nFinanSe's Lawsuit

ATLANTA -- Debit card distributor InComm has responded to the legal action filed against it by nFinanSe Inc. by saying it is both "surprised and disappointed" by "such a baseless lawsuit."

As CSNews Online reported last week, nFinanSe, a prepaid reloadable debit card seller, filed a federal lawsuit alleging price fixing and breach of contract in the U.S. District Court, Northern District of Georgia.

In its lawsuit, nFinanSe said InComm was displeased with its pricing, which is the industry's lowest, so the latter tried to get nFinanSe to join its debit-card network, which requires members to charge a "reload" fee of $3.95 each time they add more cash to the card. That reload fee is $1 more that nFinanSe currently charges.

In a letter sent to retailers least week, nFinanSe CEO Jerry Welch said the company regrets that legal action was necessary, but it felt it "had no choice."

"We believe in free competition. We have never suggested that a retailer should carry an nFinanSe [general purpose reloadable] card only," Welch wrote. "Instead, we have recommended that retailers offer multiple GPR cards from different program managers in order to provide store customers with choice and selection, just as you do in other merchandise categories. Further, we feel strongly that a retailer should have a product in their assortment, which is priced comparably to Walmart. In today's difficult economic environment, no retailer can afford to concede a price advantage to Walmart if they can avoid it."

In its own statement released yesterday, InComm said perhaps the most disappointing aspect of nFinanSe's action is the "meritless antitrust allegations related to InComm's proposed reload network."

InComm expanded upon that comment by saying its reload network is made available to its partners at a specific price point. "nFinanSe is free to participate or not participate on those terms at its discretion. If it chooses not to participate, nFinanSe can continue to use its existing reload platform or any of the others available in the industry."

InComm concluded by stating that it has acted "entirely appropriately and fully expects to prove that nFinanSe's lawsuit is completely without merit."