Visa faces antitrust suit over network fees

Yesterday, the 5th U.S. Circuit Court of Appeals reinstated two counts in an antitrust suit against Visa related to its debit card fees for payment processing networks. The plaintiff, Pulse Network LLC, argues that Visa’s fixed monthly fees for use of its debit card network encouraged payments processors to favor Visa over other card networks.

Why should we care?
In its court arguments, Pulse claims that Visa has strongarmed merchants to pay for fees they wouldn’t accept from others. The case ruling will only apply to Pulse and Visa, and won’t affect other card networks or payment processing networks, but it may have an effect on Visa’s business model moving forward. Court-based intervention could slightly level the playing field between Visa and other card networks, though Visa’s market share is significant and unlikely to change anytime soon. But the court case could damage Visa’s reputation, and may shape public perception of centralized payments networks. If, as Pulse argues, Visa has pushed a business strategy that hinders healthy competition within the payments landscape, then a ruling in favor of Pulse could sow the seeds for new players in the sector—both decentralized networks as well as public-option ones.