Dive Brief:

• A federal judge in New York rejected Visa’s effort to dismiss the Justice Department’s 2024 lawsuit alleging that the card network operates an illegal monopoly in the debit card market.
• Visa’s request amounts to “the premature resolution of factual issues” at an early stage in the complaint — filed in September by the Biden administration — U.S. District Judge John Koeltl ruled in an order released Tuesday, finding that the government’s allegations about Visa’s actions in the debit market were plausible.
• Visa has no comment on Koeltl’s ruling, a spokesman said. The company, which operates the largest U.S. card network, has previously denied the government’s allegations.

Dive Insight:

Visa handles more than 60% of U.S. debit card transactions on its network, collecting more than $7 billion annually in processing fees, according to the complaint, which was filed in U.S. District Court for the Southern District of New York. Mastercard is a distant second in the market, with less than a quarter of the debit-processing market, the lawsuit said.

On the debit business, Visa earns over $5.6 billion in net revenue annually, according to the complaint. “Visa is thriving,” the judge noted in his decision, which was signed on Monday.

The lawsuit alleges that Visa operates an illegal monopoly in the market for debit card payments, and “wields its dominance, enormous scale, and centrality” to impose agreements on merchants and banks that exclude potential competitors from debit processing, the Justice Department said when it filed the complaint under then-Attorney General Merrick Garland. 

The company also struck agreements with various fintech firms to prevent them from entering debit market competition, according to the lawsuit.

Americans purchase more than $4 trillion worth of goods and services with debit cards each year, according to the complaint. Visa’s monopoly in the debit card payments market adds billions of dollars in extra fees that Americans pay when merchants increase prices to cover added costs for debit card purchases, DOJ officials said at the time of the lawsuit’s filing.

The San Francisco-based network filed its motion to dismiss the case in December. It put forth three arguments as reasons Koeltl should dismiss the complaint. 

The company alleged that the government’s view of the debit market is wrong because it excluded other payment networks that transfer money. It also said the Justice Department had failed to allege any harm to competition because Visa did not discount its debit processing prices below its costs. And Visa contended that the terms of its contracts with various companies such as Apple and PayPal Holdings disprove the DOJ’s allegations that it had induced other companies not to compete in debit card transactions.

Koeltl found all three arguments unpersuasive, meaning the litigation will continue.

Visa earned more from its debit card processing business than credit cards in 2022, according to the complaint.