Justice Departments Under Democratic and Republican Administrations Have Condemned Visa’s Monopolization of the Market
The Justice Department recently filed a sweeping antitrust lawsuit against Visa. The complaint alleges that Visa has been monopolizing the debit card market, paying rivals not to innovate or compete with them, and extracting fees that inflate prices of “nearly everything.”
The complaint continues bipartisan agreement that the payment card industry has gone too far. The Justice Department has now taken action to challenge Visa’s anticompetitive practices under both Democratic and Republican administrations. In 2020, DOJ under the Trump administration filed an antitrust lawsuit and successfully stopped Visa from acquiring fintech competitor Plaid.
There is little doubt that giant card networks like Visa are stifling competition and holding back innovation in the credit card market as well as in the debit card market. But while current law requires a baseline of network market competition in debit cards, there is no foundational competition at all on credit card swipe fees. Legislation is needed to boost credit card competition.
Take a look at what bipartisan Justice Department officials have written and we think you’ll agree that we need to strengthen competition to make sure these same practices don’t happen in the credit card market.
|
Biden Justice Department
- “Visa’s systematic efforts to limit competition for debit transactions have resulted in billions of dollars in additional fees imposed on American consumers and businesses and slowed innovation in the debit payments ecosystem.” (press release)
- “We allege that Visa has unlawfully amassed the power to extract fees that far exceed what it could charge in a competitive market,” said Attorney General Merrick B. Garland. “Merchants and banks pass along those costs to consumers, either by raising prices or reducing quality or service. As a result, Visa’s unlawful conduct affects not just the price of one thing – but the price of nearly everything.” (press release)
- “[A]bsent Visa’s anticompetitive and exclusionary conduct, competition from current and potential rivals would increase competition and likely lead to lower fees, better service, or greater innovation.” (complaint at p. 51)
- “Visa’s efforts have not only reduced innovation from other companies that would benefit consumers and businesses today, but also its own incentives to innovate: Visa admitted that it has not materially invested in innovation in the last decade other than its tokenization efforts.” (complaint at p. 53)
|
Trump Justice Department
- “Visa’s excessive debit fees operate as a tax on merchants that is passed on to consumers and burdens the entire economy.” (complaint at p. 9)
- “Visa has entered into a number of ‘partnerships’ that benefit Visa at the expense of merchants and consumers. This conduct has prevented cheaper, more efficient online debit options from gaining traction.” (complaint at p. 14)
- “As a monopolist with an approximately 70% market share in online debit, Visa has a strong incentive to continue to suppress entry by prospective rivals.” (complaint at p. 19)
- “In a victory for American consumers and small businesses, Visa has abandoned its efforts to acquire an innovative and nascent competitor…With more competition, consumers can expect lower prices and better services.” (press release issued when Visa halted the Plaid merger)
|
COMPETITION IS BETTER FOR EVERYONE
IT'S TIME TO PASS THE CREDIT CARD COMPETITION ACT
(H.R. 3881 AND S. 1838)
