Source: United States Department of Justice
Remarks as Prepared for Delivery
This afternoon, the Justice Department filed a monopolization lawsuit about a financial network we do not see but cannot escape. Every year, this financial network processes 157 billion debit transactions. Whether at the grocery store, the pharmacy, the gas station or online, millions of Americans give merchants their debit credentials, allowing them to pay for goods and services directly from their bank accounts. And for Americans of all stripes, they either need or prefer this payment option.
What those millions of Americans cannot see is that behind every debit transaction is a communications infrastructure that makes it all happen.
But this infrastructure is neither innovative nor new.
In fact, it has been around in one form or another since the 1970s. Despite the passage of time, the dawn of new technologies and payment paradigms, one corporation, Visa, is an unavoidable debit network for merchants, banks and consumers. And Visa knows it.
Visa’s dominance is reflected in its slogan “everywhere you want to be.” But for merchants, banks and consumers, one could just as easily add “whether you want us or not.” Because in fact Visa has not maintained this dominance by innovating, competing on the merits or championing consumer choice. It has done so through exclusion and penalization. Visa’s conduct is unlawful, and today, we filed suit to stop it.
Visa has a durable monopoly over debit card networks. More than 60% of debit transactions in the United States run on Visa’s debit network, allowing it to charge over $7 billion in fees each year for these transactions. Visa rakes in sky-high margins and faces, in its own words, approximately zero marginal costs.
Those fees have many names. A domestic service fee. A data processing fee. An acquired service fee. A network acquirer fee. A fixed acquirer network fee.
Regardless of what they are or who pays them, these fees add up to billions in hidden costs and tolls that must be borne by businesses, working families and the U.S. economy more broadly.
Visa knows the source of this dominance is its immense scale on both sides of the market. It is widely used by consumers’ banks on the one hand and cannot be avoided by merchants on the other hand. Visa recognizes that this scale is an “enormous moat” that protects and sustains its monopoly debit business and profits.
As we allege in our complaint, it did not have to be this way. But in the early 2010s, competition threatened to erode Visa’s debit monopoly.
At that time, this monopoly faced twin competitive threats.
First, Congress sought to unlock competition and lower prices by requiring banks that issue debit cards to include at least two debit routing options on their cards. This would allow debit payment networks to compete for transactions between consumers and merchants at the point of sale.
Second, at the same time, technological innovation had sprouted a new paradigm in which merchants and consumers could directly connect with fewer middlemen like Visa.
Faced with these threats, Visa developed a plan to wield and protect its monopoly power and distort competition for debit transactions. Visa extracted a series of agreements with major merchants, banks that issue debit cards and other key industry players. Those agreements forced merchants who might consider a lower cost rival into a false choice: choose Visa or face ruinous fees on every single Visa transaction.
There’s more. Visa feared entry by potential fintech competitors like Apple, PayPal and Square. It worried these competitors might have what it described as “network ambitions,” which would threaten Visa’s dominance and centrality in debit. It worried about fintech payment networks gaining scale with both merchants and consumers and “becom[ing] a viable merchant option: positioned and priced as a ‘Substitute for Debit.’”
So, Visa began co-opting and neutralizing competition by turning rivals and potential competitors into Visa “partner[s]” on the condition they did not develop competing payment products.
Visa offered payoffs to incentivize potential competitors to keep out of the debit market. It also threatened potentially ruinous financial penalties if up-and-coming competitors innovate in ways Visa dislikes. As Visa’s then-chief financial officer (CFO) explained in 2023, Visa makes “it worth their while to partner with us.”
Through these agreements, Visa shrewdly and deliberately built for itself the cosseted life of a monopolist in which, as Visa’s CFO emphasized, “Everybody is a friend and partner. Nobody is a competitor.” But the antitrust laws have something to say about that. And that is why we have filed today’s lawsuit against Visa.
For more than a century, the Justice Department has fought anticompetitive conduct in financial services markets. From stopping mergers that threaten affordable access to banking, like Philadelphia National Bank, to breaking up the rules that restricted competition on the NASDAQ, the division has made clear the antitrust laws protect the financial system that benefits small and large businesses, and consumers, from monopolists and anticompetitive behavior alike. Today’s case follows the long and storied legacy of the Antitrust Division to vindicate competition in American commerce.
In closing, I would like to thank the incredibly hardworking, brilliant and service-minded attorneys, economists and paralegals of the Antitrust Division. Their tireless efforts to restore economic justice to this critical market resulted in today’s filing. I am proud every day to be their colleague, but especially today.