Retailers Welcome Court Ruling Allowing Antitrust Lawsuit Against Visa
WASHINGTON, D.C. — The National Retail Federation (NRF) and NACS were among the retail trade groups that welcomed a federal appeals court ruling that Pulse can move forward with its antitrust lawsuit against Visa.
The payment processing network claims Visa's practices reduce competition regarding who gets to process billions of dollars in debit card transactions each year.
"Visa and Mastercard have responded to efforts to bring competition to debit card processing by introducing multiple initiatives intended to keep the market to themselves and block innovation," said Stephanie Matz, NRF chief administrative officer and general counsel. "This ruling makes it clear that these practices will not be allowed to go unchallenged and sends a message that the days of giant card networks dominating the market are numbered."
A three-judge panel of the 5th U.S. Circuit Court of Appeals reinstated two counts of Pulse's 2014 antitrust lawsuit against Visa, saying a U.S. District Court judge in Texas had improperly dismissed the case in 2018 when she said Visa's practices affected only merchants and card-issuing banks rather than Pulse. The appeals court sent the case back to District Court for further consideration and ordered that a new judge be assigned.
Pulse argued in its lawsuit that a "Fixed Acquirer Network Fee" created by Visa after Congress passed the Durbin Amendment to regulate debit card transactions in 2010 violates federal antitrust law. The new monthly fee came in addition to existing per-transaction fees for processing debit transactions. To recoup the new fee, merchants would be forced to route debit transactions through Visa's networks even if they preferred to use a competitor such as Pulse, the lawsuit claimed.
"The 5th Circuit's decision validates the complaints that NACS and its members have long lodged: that Visa has abused its market power to reduce competition for debit transactions," said Doug Kantor, NACS general counsel. "This decision should serve as a boost to the legal claims NACS and others have against Visa and help the Justice Department in its investigations."
Pulse also cited new agreements Visa reached with card-issuing banks and merchants giving them rebates, discounts and other incentives to route a certain number of debit transactions each month over Visa's networks.
Those two issues will now be heard in court. The appeals court let stand the U.S. District Court's dismissal of Pulse's claim that it was harmed by Visa's "PIN-Authenticated Visa Debit" program, which guarantees that Visa can compete for all PIN transactions on Visa-branded debit cards even if the issuer has not enabled Visa's Interlink PIN network on the card.
Congress passed the Durbin Amendment in 2010 to address alleged increasing swipe fees to process debit transactions set by Visa and Mastercard and lack of competition among card-issuing banks. The Durbin Amendment has increased the number of debit transactions routed over independent networks, but Visa and Mastercard's networks still account for the majority of transactions, stated NRF.
Debit and credit card swipe fees came to $137.8 billion in 2021, with debit accounting for $32.6 billion of the total, according to the Nilson Report.
The National Retail Federation, the world’s largest retail trade association, advocates for the people, brands, policies and ideas that help retail thrive.
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