The Justice Department May Haul Visa Into Court Over Debit Card Issues

The biggest question the payments industry is wrestling with this week is whether the U.S. Department of Justice is about to sue Visa Inc., apparently over debit card issues.

The financial wires were abuzz with speculation Tuesday morning that the DoJ could file an antitrust lawsuit before the day is out. As of mid-morning, there was no announcement from Justice. But investors clearly were worried—Visa’s stock price was off 4% from Monday’s close.

The Bloomberg news service reported the DoJ will allege Visa has attempted to monopolize the U.S. debit card market. The New York Times says the government also will claim the card network penalizes merchants that try to use competing debit networks.

Visa did not respond to a request from Digital Transactions News for comment. The Electronic Payments Coalition, a Washington, D.C.-based lobbying group of networks and financial companies concerned mainly with credit card issues, declined comment for now.

Visa however, is no stranger to scrutiny from the DoJ over debit matters. In early 2021, the network dropped its $5.3-billion bid for the data network Plaid Inc. in the wake of an antitrust suit filed by the DoJ. The government feared Visa could use Plaid’s links to financial institutions to stifle competition in the debit market, a contention Visa denied.

The DoJ reviewed a “tremendous amount” of documents in the Plaid case, according to Doug Kantor, general counsel for Arlington, Va.-based NACS (formerly the National Association of Convenience Stores), a frequent opponent of the payment networks on interchange and related payment card acceptance issues.

“It’s very likely the material taught them some things about Visa’s actions in the debit market,” Kantor tells Digital Transactions News. “A lot of those would raise concerns for any antitrust lawyer.”

Asked about specifics, Kantor says, “We know from a merchant’s point of view Visa has employed tricks and traps for any competitor” to capture transaction volume. “It is clear over time that Visa’s actions, even when they’re cloaked in things like security, are really about protecting market share rather than those other things.”

But consultant Eric Grover, principal of Minden, Nev.-based Intrepid Ventures, says the DoJ made a “preposterous allegation” in the Plaid case that Visa had a monopoly in the online debit-network market.

“It’s true that Visa has more resources and technology prowess than its national debit network competitors,” Grover says by email. “But with each of these concerns, one has to ask, how is consumers’ welfare being harmed? I think there’s a pretty straightforward case that consumers are benefiting. I look forward to reading what the DoJ alleges when they file the antitrust suit.”