Visa faces US antitrust probe over debit card transactions

US Department of Justice is investigating Visa's rules for routing its card transactions in stores and online

At the heart of the US Justice Department’s issues with Visa is the 2010 law known as the Durbin Amendment, which requires banks to include two networks on their debit cards. 

The US Department of Justice has launched an antitrust investigation into Visa’s practices regarding debit card transactions.

The department is understood to be looking into the network’s rules for routing transactions both in stores and online.

Last year, the department sued Visa to block a $5.3bn (€4.4bn) deal the network had signed with financial services company Plaid, saying that the combination would further limit competition in the market for online debit-card transactions. Visa and Plaid ultimately abandoned the deal.

In its suit against Visa last year, the US Justice Department said Visa already possessed monopoly power in the market for online debit card transactions, arguing that roughly 70% of such transactions in the US routed over the firm’s network.

The Durbin Amendment

At the heart of the Justice Department’s issues with Visa is the 2010 US law known as the Durbin Amendment, which requires banks to include two networks on their debit cards. 

The idea is that merchants are then supposed to be given the choice of routing over a major network like Visa’s or the one run by rival Mastercard versus a smaller alternative such as Pulse, Star, or NYCE. 

Those alternative networks can be cheaper for merchants.

Visa, in its response last year, argued that the Justice department cherry-picked its definition of the online debit card market to make it seem like the network holds more power than it does.

• Bloomberg