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Insights and Expertise

DOJ versus Visa: The transaction routing requirement was intended to bol-
ster competition and drive a race to the bottom.
Preparing for a Contrary to expectations, single message network market

shares declined from 39 percent in 2011 to 29 percent in
shake-up in debit 2021, indicating the potential unspoken desire of Senator
Durbin to shift share to single message networks was inef-
fective.

Additionally, newer payment types like The Clearing
House's RTP Network and the FedNow service have not
gained significant adoption at the consumer point of pur-
chase, with only 1.5 percent of U.S. payment volume in
2023 being real-time.

Allegations of a debit monopoly
According to the DOJ, Visa's arrangements with mer-
chants, banks and payment processors included terms
such as penalties, pricing conditions and volume require-
ments that hindered competition. Implementing this strat-
egy reportedly allowed Visa to secure a significant market
share, creating a steep hurdle for new or existing players
to compete effectively.

The DOJ claims that in addition to Visa monopolizing
markets across the country, consumers may face higher
By Leanne Lange prices for goods and services.
SRM
To address these concerns, the DOJ seeks to prohibit Visa
his fall, the U.S. Department of Justice filed an from engaging in several restrictive practices that could
antitrust lawsuit against Visa, alleging that the limit competition. This includes preventing the company
corporation created a "web of unlawful anti- from bundling credit and debit services or tying them to
T competitive agreements to penalize" financial incentive programs while also restricting its use of certain
institutions, merchants and processors for using compet- pricing tactics, such as "cliff pricing." Moreover, the DOJ
ing payment networks. wants to limit Visa's ability to directly or indirectly refer-
ence competitors in its contracts with clients.
The DOJ asserts that Visa holds an unfair, dominant ad-
vantage in the U.S. market for general-purpose debit cards Visa would also be restricted from imposing fees on debit
and online debit payment services. Through such alleged transactions processed through non-Visa networks and
monopolization, Visa allegedly engaged in anti-competi- from limiting the number of networks that can appear on
tive practices and has maintained its market dominance the back of its branded debit cards. The DOJ also aims to
through restrictive agreements with competitors. prevent Visa from imposing contractual limitations on its
customers' ability to leverage rival networks, alternative
From the DOJ's perspective, Visa leveraged its monopoly payment solutions or fintech companies.
to hamstring innovative and cheaper debit alternatives
like PayPal, Apple and Block. Based on the results of the Finally, the DOJ wants to curb Visa's ability to enforce
DOJ's lawsuit, the payments industry could face signifi- contractual terms that restrict clients from adopting or
cant impacts. implementing alternative payment methods, networks or
technologies that could reduce their dependency on Visa's
Decline in competition? services.

Since the introduction of the Durbin Amendment and the Visa's potential counterarguments
implementation of Regulation II, regulators have been
keeping a close watch on the U.S. debit landscape. Reg II Although the DOJ has been monitoring the regulatory
aimed to reduce merchant acceptance costs by controlling ecosystem and tracking data for over a decade, there are
debit interchange fees, mandating two unaffiliated net- several potential countervailing arguments for Visa.
works per debit card transaction and enforcing transac-
tion routing rules. • Merchant savings and routing control: Reg II has
provided approximately $7 billion in savings by
shifting revenue from debit issuers to merchants
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