Visa chief pans DOJ on debit suit

Visa CEO Ryan McInerney said the card giant is standing firm on its position in the debit marketplace, rejecting a Department of Justice lawsuit that it has created a monopoly in the debit card marketplace.

In a recent call with analysts to discuss Visa' fourth quarter and year-end financial results, McInerney asserted that the DOJ simply doesn't understand how the business works, and that Visa is prepared to fight the allegations vigorously.

Visa's fourth quarter and fiscal year 2024 ended on Sept. 30, 2024.

'Web' of agreements keeps competitors at bay?

The DOJ filed a civil lawsuit in U.S. District Court for the Southern District of New York in September of this year, alleging Visa illegally maintains a monopoly over debit network markets, using its dominance to thwart growth of existing competitors and preventing other companies from developing new and innovative alternatives.

Attorney General Merrick Garland noted during a September press conference that more than 60 percent of debit transactions in the United States run on Visa's debit card network, generating over $7 billion in yearly processing fees.

And he alleged that Visa has entered into a "web of unlawful anti-competitive agreements" with merchants and banks to support that revenue flow.

The lawsuit contains allegations that Visa exerts leverage based on large numbers of transactions that must run over its payment rails, or risk higher fees—what the department referred to as "disloyalty penalties" to force merchants and their acquiring banks to keep transactions off smaller competing networks that offer lower per-transaction fees.

The DOJ also alleges that Visa induces would be competitors to become partners instead of entering the debit market as competitors by offering generous monetary incentives and threatening punitive additional fees if they decline to partner.

Not surprisingly, retailers cheered the DoJ lawsuit, Stephanie Martz, general counsel at the National Retail Federation adding the allegations are just the "tip of the iceberg."

The NRF is one of many parties that has taken Visa, and its competitor Mastercard, to court over fee structures and rules.

A weak grasp of how things work

McInerney, in his remarks to analysts, said he expects Visa to prevail in the DOJ lawsuit. "We believe the lawsuit is meritless and shows a clear lack of understanding of the payments ecosystem in the United States," he said. "We will defend ourselves vigorously and are confident in our ability to demonstrate that Visa competes for every transaction in a thriving debit space that continues to grow and see new entrants."

Delving into financials, payments volume on the Visa network was up 8 percent in fiscal year 2024 on a constant dollar basis. "Visa had a robust fourth quarter to finish a very strong fiscal year," McInerney said in a statement. "We see tremendous opportunity ahead to grow our business, deliver for our clients and collectively shape the future of commerce."

Christopher Suh, chief financial officer at Visa, said in the meeting with analysts that U.S. payment volume was up 5 percent year-over-year, with credit and debit volume each growing 5 percent during the fourth quarter.

Card-present volume grew 2 percent and card-not-present volume was up 6 percent. In terms of the first three weeks of the first fiscal quarter of 2025, Oct. 1 through Oct. 21, U.S. payments volume, in constant dollars, was up, 6 percent year-over-year, with debit card volume up 7 percent and credit card spending up 6 percent year-over-year.

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