The National Retail Federation (NRF) has expressed support for a lawsuit filed by the Department of Justice (DOJ) against Visa, accusing the company of violating federal antitrust law through its debit card practices. However, the NRF suggests that Visa's anticompetitive actions extend beyond this issue.
"Visa has blocked competition over both credit cards and debit cards for years to maintain its domination of the payments market and protect the billions of dollars in profits it makes off Main Street merchants and their customers," said Stephanie Martz, NRF Chief Administrative Officer and General Counsel. "The DOJ is taking action on Visa’s debit card practices but that is just the tip of the iceberg. This case is a major step forward in fixing our nation’s broken payments market, but it should not be the last. The courts, Congress and federal agencies each have roles to play in bringing competition to credit and debit cards and putting Main Street ahead of Wall Street."
The DOJ announced today that it has filed a lawsuit against Visa, alleging that some of its practices involving debit cards are anticompetitive and violate the Sherman Antitrust Act. According to the DOJ, Visa made exclusive agreements that hindered competing networks' expansion and blocked technology companies' efforts to enter the market.
Until 2011, transactions using Visa and Mastercard debit cards could only be processed over their respective networks. However, Congress passed the Durbin Amendment in 2010, requiring banks with at least $10 billion in assets to ensure their debit cards could be processed over at least one unaffiliated network such as NYCE, Star or Shazam in addition to Visa or Mastercard. These competing networks offer lower fees and better security, saving merchants and their customers over $8 billion annually.
The DOJ's announcement coincides with Congressional consideration of the Credit Card Competition Act. This legislation would extend similar network choice requirements to credit cards. Under this act, banks with at least $100 billion in assets would need to enable credit card processing over at least one unaffiliated network besides Visa or Mastercard. Merchants would then choose which network to use, fostering competition over fees, security, and service—potentially saving merchants and customers over $16 billion annually.
Visa and Mastercard currently control more than 80% of the credit card market. Both companies centrally set "swipe" fees charged by all banks issuing their cards for transaction processing while restricting transaction processing exclusively to their own networks.
Earlier this year, a federal judge rejected a proposed settlement for an ongoing antitrust lawsuit concerning Visa and Mastercard credit card swipe fees after objections from NRF and other groups about inadequate reductions offered by the settlement. Additionally, the Federal Reserve has proposed reducing the 21-cent per-transaction cap on debit card swipe fees established under the Durbin Amendment to 14.4 cents; however, NRF advocates for a cap reduction to 10.5 cents instead. Furthermore, a North Dakota truck stop has been allowed by the Supreme Court to proceed with a lawsuit claiming that even a 21-cent cap was set too high.
According to Nilson Report data, debit and credit card swipe fees have doubled over the past decade reaching a record $172 billion last year—costing retailers significantly while burdening average families with higher prices amounting to more than $1,100 annually.
About NRF:
The National Retail Federation advocates for people involved in retail from its headquarters in Washington D.C., supporting policies beneficial for retail success across local communities globally through education & communication efforts highlighting retail's economic impact.
