By Neo Gaitan '25
Last fall, the Justice Department filed an antitrust lawsuit against Visa Inc. for monopolization in debit network markets in violation of Sections 1 and 2 of the Sherman Act. (1) The suit alleges that Visa maintains an illegal monopoly over debit network markets, where firms connect consumers to merchant banks. (2) By using their dominance in this market, they thwart the growth of their existing competitors and prevent others from developing innovative alternatives. (3) According to the Justice Department, “Visa wields its dominance, enormous scale, and centrality to the debit ecosystem to impose a web of exclusionary agreements on merchants and banks. These agreements penalize Visa’s customers who route transactions to a different debit network or alternative payment system.” (4) These actions isolate the company from competition and smother lower-price competitors.
This action is nothing new–it is another installment in the continuous legal battle the U.S. government has had with the debit card market. Notable attempts to fight the industry include American Express’ lawsuit against both Visa and Mastercard as well as the Durbin Amendment. This amendment aided the regulation of interchange fees, lowering fees that merchants pay to banks when customers use debit cards for purchases. (5) However, the Durbin Amendment was a poor attempt at correcting a mistake in federal legislation against the credit card industry. Although the Department’s use of the Sherman Act to thwart Visa’s monopoly appears to help the everyday consumer, it fails to bring about a strong allegation that Visa is an existing monopoly and further highlights shortcomings within antitrust regulations.
A key issue regarding Visa is how it can be defined as a monopoly under antitrust policy. The Justice Department claims Visa dominates the debit network market by creating exclusionary agreements with merchants and banks when in reality, the few competitors in this market practice the same actions as Visa. Mastercard, like Visa, works with banks to provide services that Visa can’t work with, and vice versa; hence, Wells Fargo has Visa on their debit cards and Chase has Mastercard: both companies partner with specific banks that become part of their own debit network. Even though American Express (Amex) does not partner with any bank, they do provide agreements with certain companies and have perks for their customers. Therefore, if the practices of these companies were truly illegal, how could any of them continue operations?
The answer: it’s not. These are general practices used by every firm to compete with each other and have been used since the inception of debit cards in the 1970s. To claim in this specific case that one firm has created a monopoly by using the same practices as other firms in the industry is inconsistent.
Moreover, the statistics show that Visa is numerically not a monopoly. The Sherman Act was created to prevent monopolies like Standard Oil that had complete dominance in their respective market, but Visa does not have total control over its industry. According to the annual filings of Visa, Mastercard, and Amex, the firm that garnered the most revenue in 2024 was the latter firm, even with the lowest transaction of the three. (6) Amex made a total of $65B in revenue, higher than both Visa and Mastercard combined; Visa made $35B in revenue even with the highest transaction volume. (7) Meanwhile, Mastercard made $25B in 2024—not even half of Amex’s revenue. However, an argument can be made that, since Visa’s market share of the credit cards in circulation is the highest at 57.5%, they have a monopoly over their competitors. (8) But this is still insufficient since Mastercard also has a strong share within credit card circulations with a consistent 22% market share for the past 5 years, but an increase of 27.41% in 2022. (9)
Another point of conflict in this case concerns growth in payment volumes. The world has seen an increase in payments since the 1970s that continues to grow, with the general consumer using their debit card millions of times in a year. This is greatly facilitated by the work of three main players in debit/credit cards as well as quicker transactions and processing. Financial technology has given rise to various alternative payment platforms; companies like Paypal, Square, and Apple are just a few of many players providing these services, separated from Visa’s grasp.
These developments further question the actual landscape the Justice Department claims Visa controls; the rise in alternatives would not have come to fruition if a sole entity held all power over an entire market. (10) With this in mind, the Justice Department’s statement that Visa can thwart its competitors can’t be true since there are already other firms creating a more diverse market. (11)
It is doubtful for this case to receive an actual verdict due to the current administration’s new objectives for the Justice Department; despite the work that former Attorney General Merrick Garland put into this case, it will not be a high priority for the new Attorney General, Pam Bondi, as of right now. However, this does not nullify the inherent problem with antitrust policy in our legal system. The inherent problems of the monopoly claim in this case clearly show the barriers antitrust laws face in paving a clear path forward.
This worrisome abuse of the law calls into question the government’s solution. Unfortunately, current antitrust policies are obsolete and fail to account for the complexity of several markets, like Visa’s. A clear update in legislation is the only way forward. As splitting up Visa could leave millions of consumers without a reliable network, if the government cannot forge a solution to end Visa’s supposed monopoly, then there is no need to waste resources on a case that ultimately alienates the consumer.
Endnotes
“Justice Department Sues Visa for Monopolizing Debit Markets.” Justice.gov, September 24, 2024. https://www.justice.gov/opa/pr/justice-department-sues-visa-monopolizing-debit-markets.
“UNITED STATES DISTRICT COURT for the SOUTHERN DISTRICT of NEW YORK,” U.S. Department of Justice Antitrust Division, September 24, 2024. https://www.justice.gov/opa/media/1370421/dl.
Ibid.
Ibid.
Ryan McCarthy, “The Durbin Amendment: Summary, Impact, and Reform,” Review of Banking and Financial Law. Boston University, 2017. https://www.bu.edu/rbfl/files/2018/03/68-84.pdf.
“UNITED STATES SECURITIES and EXCHANGE COMMISSION Form 10-K .” American Express Company, Accessed January 28, 2025. https://d18rn0p25nwr6d.cloudfront.net/CIK-0000004962/fdcb94cb-6bf6-4ae3-a26a-f4a3b17f8ed1.pdf.
“Form 10-K,” Mastercard Incorporated, December 31, 2023. https://d18rn0p25nwr6d.cloudfront.net/CIK-0001141391/1a67e97e-b966-461c-b71f-893129295992.pdf.
“ANNUAL REPORT pursuant to SECTION 13 or 15(D) of the SECURITIES EXCHANGE ACT of 1934,” Visa Inc, September 30, 2024. https://d18rn0p25nwr6d.cloudfront.net/CIK-0001403161/2ddc584c-441d-475b-8a97-630dad75db94.pdf.
Christy Rodriguez, “U.S. Credit Card Market Share - Facts & Statistics [Data Study],” January 5, 2022, UpgradedPoints.com. https://upgradedpoints.com/credit-cards/us-credit-card-market-share-by-network-issuer/.
Robert Freedman, “DOJ’s Visa Suit Is Unfounded,” November 5, 2024. https://www.legaldive.com/news/dojs-visa-suit-is-unfounded/732048/.
Ibid.
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