Visa Faces Prolonged Legal Battles Over Debit Card Market Dominance
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A growing wave of antitrust challenges threatens Visa’s position in the debit card market, as a judge recently allowed a class action lawsuit filed by merchants to proceed, adding to an existing case brought by the Department of Justice. The company now anticipates years of litigation on multiple fronts.
A federal judge rejected Visa’s attempt to dismiss claims from merchants alleging the company holds a monopoly in the debit card market, Bloomberg reported on August 20. The ruling centered on a previous settlement in a similar case, with the judge determining that the circumstances of the current lawsuit are “materially different.”
Merchants Allege Anticompetitive Practices
The current suit, filed in October, accuses Visa of engaging in anticompetitive behavior that artificially inflates fees charged to merchants. According to the complaint, “Visa dominates the debit network market, and it has engaged in unlawful conduct that has artificially raised the price of those fees beyond what they would be in a more competitive market.” The merchants further allege that Visa actively works to “punish businesses that seek to use alternative networks or methods to process debit transactions.”
The judge’s decision to allow the case to proceed stems from key distinctions between the current litigation and a 2019 settlement. The earlier case involved both Visa and Mastercard, while the current action focuses solely on Visa. This difference in scope, the judge reasoned, renders the previous settlement inapplicable.
DOJ Intensifies Scrutiny
The merchant lawsuit is not the only legal challenge Visa is confronting. Just a week prior, on September 24, the Department of Justice (DOJ) filed its own antitrust lawsuit against the company, alleging similar practices aimed at stifling competition in the debit card market.
The DOJ’s complaint details accusations that Visa employed exclusionary contracts and other anticompetitive tactics to maintain its market share, ultimately leading to higher costs for both merchants and consumers. A Visa General Counsel dismissed the DOJ’s claims as “meritless,” stating that the lawsuit “ignores the reality that Visa is just one of many competitors in a debit space that is growing, with entrants who are thriving.”
Legal Battles Extend into the Future
In June, a federal judge also rejected Visa’s attempt to dismiss the DOJ lawsuit, deeming the arguments “premature” and allowing the government to move forward with its case. With both the DOJ lawsuit and the merchants’ class action now permitted to proceed, analysts predict a protracted legal battle for Visa. Bloomberg’s report suggests the company is bracing for years of litigation as it defends its position in the increasingly scrutinized debit card market.
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The confluence of these legal challenges signals a significant moment for the payments industry, potentially reshaping the competitive landscape and impacting the fees merchants pay to process debit card transactions.
