Making Sense of the Visa Monopoly Lawsuit for Business Owners

By Merchant Advocate 

Visa is one of the most recognizable names in the credit card industry, but many may be unaware of their 60% debit card market share. This majority control has elicited the interest of  the U.S. Department of Justice (DOJ), which filed an antitrust lawsuit against Visa in September 2024. 

The lawsuit alleges that Visa’s business practices stifle competition, inflate fees, and harm both consumers and merchants. In order to best understand this case, it’s important for business owners to grasp how debit and credit card transactions differ—and the costs they carry.

The Cost Breakdown: An Overview of Credit vs. Debit

Generally, debit card transactions cost business owners less than credit card transactions. For large banks (those with over $10 billion in assets), debit fees are capped at 0.05% + $0.21 per transaction under the Durbin Amendment. Smaller banks, however, are not subject to this cap, and online debit transactions tend to incur higher fees than in-person ones.

On the other hand, credit card fees are higher because of increased fraud risk and steep interchange rates. Unlike debit cards, credit cards are not regulated under the Durbin Amendment. This has allowed card networks, like Visa’s, to set varying fees, depending on whether the issuing bank is regulated or not.

“Debit runs on different ‘rails’ in the payment world,” explains Eric Cohen, CEO of Merchant Advocate. “Visa owns multiple debit networks, including Visanet and Interlink. That adds up to 60% of the debit transactions [in America].” This dominance has led to growing concerns about Visa’s market power.

The DOJ’s Antitrust Case Against Visa

The DOJ’s lawsuit outlines several accusations against Visa, ranging from monopolistic practices to anticompetitive agreements. Let’s break down the key issues:

Is Visa a Monopoly?

Visa controls a significant portion of the United States debit market, far outpacing its closest competitor, Mastercard, which holds 25%. According to the DOJ, Visa’s market power allows it to charge more than $7 billion in fees annually. The antitrust lawsuit argues that these fees are passed down to consumers in the form of higher prices and reduced service quality.

Visa’s Exclusionary Agreements

The DOJ also claims Visa uses exclusionary agreements with merchants, banks, and other financial institutions to maintain its dominance. These agreements penalize entities that consider switching to other networks, making it financially burdensome to do so.

“The DOJ is saying, ‘you’re not really giving someone else a choice if you’re using your power through your size to force someone’s hand,’” Cohen explains.

Suppressing Competition: PayPal & Apple Pay

The lawsuit also accuses Visa of suppressing competition from financial technology companies like PayPal and Apple Pay. The DOJ argues these practices harm small businesses and consumers, especially those who rely heavily on debit card payments. 

However, Cohen is skeptical of this claim. “If you run a convenience store or a big-box store, sure,” he says. “But most small or medium-sized businesses… I have a hard time believing that the increased debit fees—which are pennies—are a granular cost.” 

Is Visa Violating The Sherman Act?

Finally, the DOJ alleges Visa’s actions violate Sections 1 and 2 of The Sherman Act, which prohibit monopolistic practices and anticompetitive agreements. Visa, however, denies the allegations, calling the lawsuit “meritless” and insisting it operates in a highly competitive market with multiple payment options.

What it Means for Business Owners

For many business owners, the Visa antitrust lawsuit raises a key question: Will this legal battle lead to meaningful change?

“The DOJ is trying to allow more competition to come in, and that competition is coming in different forms,” says Cohen. “I believe we’ll see some companies allow for peer-to-peer payments, which enable direct fund transfers between businesses.”

However, Cohen cautions that the lawsuit is unlikely to bring immediate relief. “Big-box stores, supermarkets, convenience stores… maybe they’ll get some relief. Do I think that will be passed on to the consumer? No.”

Takeaways for Merchants

While the DOJ’s lawsuit could potentially reshape the debit card market, business owners shouldn’t wait for a legal resolution to lower credit card processing fees. Instead, they should take proactive steps:

  • Audit Processing Costs: Work with card-processing experts to identify unnecessary fees and negotiate better terms.
  • Focus on Customer Experience: Strive for efficiency and convenience to maintain strong customer loyalty, regardless of payment processing challenges.

Working with an expert in the credit card processing field, like Merchant Advocate who helps businesses save money without switching processors, can help. We’ve saved clients more than $300 million in excess fees; find out what we can do for you with a FREE, no risk-analysis.

Though the Visa antitrust litigation could take years to resolve, it serves as a reminder for business owners why it is important to stay informed and adapt to the ever-changing payments landscape.