Combatants Take Up Their Positions in Reaction to the DoJ’s Antitrust Suit Against Visa

Reaction from the payments industry to the Justice Department’s announcement Tuesday that it is suing Visa Inc. over antitrust issues involving its debit card business was swift and pointed.

As expected, representatives of the payments industry denounced the lawsuit as baseless, while representatives of the merchant community and legislators friendly to merchants hailed the lawsuit as a significant step by the Justice Department’s to curtail Visa’s unbridled power in the debit card market.

For its part, Visa came out of the gate swinging, issuing a statement that it is one of many competitors bringing innovation in the debit card space.

“Today’s lawsuit ignores the reality that Visa is just one of many competitors in a debit space that is growing, with entrants who are thriving. When businesses and consumers choose Visa, it is because of our secure and reliable network, world-class fraud protection, and the value we provide,” Visa’s general counsel Julie Rottenberg said in a statement.

Rottenberg added that Visa is “proud” of its payments network, the innovation the network fosters, and the economic opportunity it enables. “This lawsuit is meritless, and we will defend ourselves vigorously,” Rottenberg said.

The Electronic Payments Coalition, a lobbying group representing payment networks and card issuers, quickly came to Visa’s defense, painting the DoJ’s lawsuit against Visa as part of a broader strategy by government agencies to attack the payments networks.

EPC Executive Chairman Richard Hunt likened the DoJ’s lawsuit to efforts by the Consumer Financial Protection Bureau’s and the Department of Transportation’s investigation that began earlier this year into airline rewards program.

“The CFPB and Department of Transportation have already been weaponized against payment networks. Now it seems, as CFPB Director Chopra has said, ‘this is an all of government’ crusade,” Hunt said in a statement.

Hunt went on to argue that while the federal government set price controls on debit cards more than a decade ago as part of the Durbin amendment those “savings were not passed to consumers; in fact, retailers actually raised prices.”

If anything, Hunt added, the “Department of Justice should instead examine why, despite promises, corporate mega-stores have repeatedly lied about passing savings on to consumers or not hiking prices higher than inflation.”

Meanwhile, the merchant community, which has long fought Visa and Mastercard over card-acceptance costs, lined up in favor of the DoJ’s lawsuit. Stephanie Martz, chief administrative officer and general counsel for the National Retail Federation said in a statement that “Visa has blocked competition over both credit cards and debit cards for years to maintain its domination of the payments market and protect the billions of dollars in profits it makes off Main Street merchants and their customers.”

Martz went on to say the lawsuit “is a major step forward in fixing our nation’s broken payments market, but it should not be the last. The courts, Congress and federal agencies each have roles to play in bringing competition to credit and debit cards and putting Main Street ahead of Wall Street.”

The Merchants Payments Coalition also came out in support of the lawsuit, arguing that it is a response to Visa’s ongoing efforts to block competition in the debit card market.

“Visa has relentlessly flouted the law to maintain a monopoly over setting fees for transactions made with cards issued under its brand and for processing those transactions,” Doug Kantor, an MPC executive committee member and general counsel for the National Association of Convenience Stores, said in a statement.

While the MPC applauded the DoJ’s efforts to rein in Visa’s alleged control over the debit card industry. Kantor added that further competition is needed when it comes to credit card swipe fees “which currently face no competition at all.”

Even Congressional leaders took positions on the DoJ’s lawsuit. Senators Richard Durbin of Illinois and Roger Marshall of Kansas, co-sponsors of the Credit Card Competition Act, sided with the DoJ.

“At a time when hard-working Americans and small business owners are struggling with higher costs of everyday essentials, Visa should not be gaming the system to pad their own pockets,” the two legislators said in a joint statement.

Durbin and Marshall further used the announcement of the suit as an opportunity to urge passage of their Credit Card Competition Act, arguing that the CCCA is one way to bring competition to the credit card market and end the “price-gouging tactics” of the “Visa-Mastercard duopoly” that harms consumers and small businesses.