DOJ Sues Visa for Antitrust Violations in Debit Network Services

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Background

United States v. Visa Inc. is a major civil antitrust lawsuit filed by the U.S. Department of Justice (DOJ) on September 24, 2024, in the U.S. District Court for the Southern District of New York. The DOJ alleges that Visa violated Sections 1 and 2 of the Sherman Act across four claims for relief: monopolization of the U.S. markets for general purpose debit network services and card-not-present debit network services; attempted monopolization of those same markets in the alternative; unlawful agreements with competitors and potential competitors not to compete; and unlawful agreements with merchants, acquirers, and issuers that unreasonably restrain trade.

The DOJ's Section 2 theory is that Visa willfully maintained its monopoly through an exclusionary course of conduct directed at merchants, acquirers, issuers, and potential fintech rivals—conduct whose cumulative and self-reinforcing effects raised barriers to competition and deprived rivals of the scale necessary to challenge Visa. The Section 1 claims divide into two legally distinct theories: the Third Claim targets Visa's agreements with competitors and potential competitors not to compete, which the DOJ characterizes as a horizontal product market division; and the Fourth Claim targets Visa's vertical agreements with merchants, acquirers, and issuers imposing cliff pricing, volume commitments, and financial penalties.

Visa is the dominant debit network in the United States, controlling over 60% of all U.S. debit transactions and over 65% of the card-not-present debit market. The DOJ claims Visa maintains this monopoly power not by competing on the merits, but by insulating itself from competition through exclusionary and anticompetitive means and using its size, scale, and centrality to the debit transaction ecosystem to penalize those who would switch. The DOJ seeks injunctive relief to stop Visa’s allegedly anticompetitive pricing structures and to nullify agreements that restrict competition.

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Historical and Regulatory Context

The structure of the U.S. debit market did not emerge in a vacuum. Visa's and Mastercard's relationships with their respective issuers were exclusive until the early 2000s, with each network prohibiting its member banks from issuing American Express or Discover-branded credit and debit cards, thereby impairing the growth of those smaller networks. In a previous litigation, a district court struck down those exclusionary rules as illegal under the antitrust laws, and the Second Circuit affirmed the injunction in 2003—a ruling that established early precedent for challenging network exclusivity arrangements. Shortly thereafter, Visa and Mastercard settled private litigation and agreed to allow merchants to accept their debit cards without accepting their credit cards, and vice versa. By that point, however, Visa's dominance in the debit market had already been cemented.

The debit market was further shaped by the Durbin Amendment to the Dodd-Frank Act, enacted in 2010 and effective in 2012, which mandated that debit cards carry at least two unaffiliated payment networks—one on the front of the card and at least one on the back—giving merchants greater ability to route transactions away from Visa. In 2023, a Federal Reserve clarification of Regulation II went into effect, further requiring that at least one network unaffiliated with the front-of-card network be enabled for card-not-present transactions. The DOJ's current lawsuit is, in part, an argument that Visa has effectively circumvented the spirit of both Durbin and the Regulation II clarification through a web of contractual mechanisms—with merchants, acquirers, and issuers—that recreates the same exclusivity both the statute and the regulation were designed to prevent.

The DOJ’s Core Allegations

1. Monopolization (Sherman Act § 2)

The DOJ alleges that Visa has monopolized two relevant markets—general purpose debit network services and general purpose card-not-present debit network services—in violation of Section 2 of the Sherman Act.

The claim rests on two elements: first, that Visa possesses monopoly power in both markets, evidenced by market shares of at least 60% and 65% respectively and North American operating margins of 83%; and second, that Visa willfully maintained that monopoly through an exclusionary course of conduct. The DOJ alleges that Visa’s routing contracts, issuer agreements, and fintech co-optation deals are individually anticompetitive and collectively self-reinforcing, raising barriers to competition, imposing supracompetitive prices, depressing price competition, and slowing innovation. Visa’s exclusionary conduct is alleged to lack any procompetitive justification that offsets its harm.

2. Attempted Monopolization (Sherman Act § 2)

The DOJ also alleges that even if Visa does not currently possess full monopoly power in one or both markets, it has attempted to monopolize those markets in violation of Section 2. Attempted monopolization is a separate and self-contained claim requiring three distinct elements of its own: that Visa has a dangerous probability of obtaining monopoly power; that Visa acted with specific intent to monopolize each relevant market; and that each of Visa’s actions was specifically intended to destroy effective competition in those markets. The DOJ relies on the same course of exclusionary conduct alleged in the First Claim, noting the same cumulative and self-reinforcing effects. Visa’s exclusionary conduct is again alleged to lack any offsetting procompetitive justification.

3. Unlawful Agreements Not to Compete (Sherman Act § 1)

This claim targets Visa’s agreements with competitors and potential competitors—specifically the fintech co-optation deals with companies such as Apple, PayPal, and Square.

The DOJ characterizes these as horizontal market division agreements: Visa pays would-be competitors not to develop alternatives to debit card networks, not to adopt new technologies that could disintermediate traditional debit card rails, and not to compete in the relevant markets. The complaint frames these deals explicitly as “horizontal product market division” in which Visa uses custom incentive arrangements to obtain “disintermediation/non-discrimination protections, non-disparagement, and future commitments.” The DOJ alleges Visa has market power in both relevant markets and that the agreements are not reasonably necessary to accomplish any procompetitive goal — any claimed procompetitive benefits are outweighed by anticompetitive harm, and less restrictive alternatives exist.

4. Unlawful Agreements that Restrain Trade (Sherman Act § 1)

This claim targets Visa’s vertical agreements with merchants, acquirers, and issuers—the routing contracts and issuer volume commitment contracts that impose cliff pricing, penalties, and volume commitments.

The DOJ alleges these agreements unreasonably restrain trade in both relevant markets by foreclosing a substantial share of each market from competition. Specifically, the complaint alleges that Visa’s merchant and acquirer routing contracts alone foreclose at least 45% of all U.S. debit transactions, and that at least 75% of Visa’s total debit volume is insulated from competition through its combined web of contracts. The alleged effects include raising barriers to competition, imposing supracompetitive prices, depressing price competition, reducing output or other services, and slowing innovation. As with the Third Claim, the DOJ alleges no procompetitive justification that outweighs the harm and that less restrictive alternatives exist.

Court Rejected Visa’s Motion to Dismiss for Failure to State a Claim

Visa filed a motion to dismiss on December 16, 2024, moving on three grounds—market definition, anticompetitive conduct, and the alleged terms of its current partner contracts. Judge John G. Koeltl of the U.S. District Court for the Southern District of New York denied Visa’s motion to dismiss in its entirety on June 23, 2025, allowing the DOJ’s case to proceed. The Court found that Visa was essentially asking for premature resolution of factual disputes at the pleadings stage.

1. The Court Rejects Visa's Product Market Challenge

Visa argued the alleged product market was implausible because it excluded interbank payment networks like ACH and RTP, which—like debit networks—transfer funds between bank accounts and therefore should be included as substitutes.

The Court rejected this, finding that Visa placed “improper weight on the functional, rather than economic, similarities” between debit networks and interbank payment networks. The Court applied two frameworks:

Hypothetical Monopolist Test (SSNIP): The Court found that tens of millions of Americans prefer or must use debit, which in turn creates inelastic merchant demand—merchants cannot practicably walk away from Visa given how many consumers present Visa-branded cards. The Court credited the complaint’s allegation that interbank payment networks lack three of the four minimum attributes of debit—dispute and chargeback capabilities, merchant payment guarantees, and fraud protections. ACH additionally lacks real-time transaction rails, meaning it fails all four attributes. RTP, while offering real-time transfers, is available only to banks and not directly to consumers.

Brown Shoe Practical Indicia: The Court found further support in industry recognition, peculiar product characteristics, distinct customers, and distinct pricing structures—including Visa’s own internal documents distinguishing debit from other payment methods.
The Court also dismissed Visa’s logical inconsistency argument—that fintech debit networks use interbank rails yet are included in the market while interbank networks are excluded—finding that fintech debit networks use interbank rails as a backend settlement tool while still providing all four minimum attributes of debit to end users.

2. The Court Rejects Visa's Price-Cost Defense

Visa argued the complaint failed to allege anticompetitive conduct because it did not allege that Visa priced its debit services below cost—invoking the Brooke Group price-cost test as a per se shield.

The Court rejected this framing entirely. The DOJ’s theory was not predatory pricing; it was that Visa used exclusive dealing contracts to foreclose rivals from competing at all, thereby allowing Visa to charge supracompetitive prices. The Court applied the ZF Meritor standard—that the price-cost test applies only when “price is the clearly predominant mechanism of exclusion” —and found that the complaint alleged numerous significant non-price exclusionary mechanisms, including:

• Artificially high rack rates and new fixed fees (like the FANF) wielded as leverage
• Cliff pricing provisions that dramatically raised prices upon any volume shortfall
• Clawback provisions enabling recovery of previously paid incentives
• Long-term contracts covering more than 75% of Visa’s debit volume
• Coercion of issuers like JPMorgan Chase to disable PIN networks The Court found that these contracts plausibly foreclosed at least 45% of all debit transactions and over 55% of card-not-present debit transactions—a level the Court noted was sufficient to violate the Sherman Act. The Court distinguished NicSand v. 3M on the grounds that in that case retailers demanded exclusivity, competition occurred on terms the plaintiff had established, and price was the predominant exclusionary mechanism—none of which was alleged here.

3. The Court Rejects Visa's Reliance on Current Contract Terms

Visa argued that the actual terms of its current contracts with Apple, PayPal, and Square defeated the DOJ’s claim that Visa paid competitors not to compete.

The Court rejected this on two independent grounds. First, the argument improperly focused only on the face of current contracts while ignoring Visa’s alleged courses of dealing—including a decade of financial incentives and termination threats used to stymie competition. Second, resolving this argument would require weighing an incomplete factual record, as the DOJ contended Visa had failed to attach all relevant documents.

The Court also rejected Visa’s narrower argument that specific contractual clauses like anti-steering provisions are not anticompetitive, finding that argument ignored the broader factual context—including Visa’s alleged coercion of partners into contractual restraints such as preferencing Visa in signup flows and default settings, which courts have recognized can harm competition in dynamic network markets, citing Microsoft and Google.

Procedural Status and Legal Framework Going Forward

Moving into early 2026, the case has entered a contentious discovery phase. Notably, despite industry speculation over whether the transition to the Trump administration would alter the DOJ’s antitrust priorities, federal prosecutors have signaled their intent to aggressively press forward with the lawsuit. Under the current scheduling order, fact discovery closes October 16, 2026, with expert discovery to follow through April 8, 2027. Summary judgment motions are scheduled for May 6, 2027.

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Endnotes

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Author

Jingyi Fan

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Author

Jingyi Fan

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Committees

This content was produced by:

• Insurance and Financial Services Committee

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