Visa is facing a class action lawsuit from merchants connected to its debit network.
The suit accused Visa of anticompetitive behavior related to its debit card network, and was filed in federal court Tuesday (Oct. 1). It comes a little more than a week after the company was hit by an antitrust suit by the U.S. Department of Justice (DOJ).
“Visa dominates the debit network market, and it has engaged in unlawful conduct that has artificially raised the price of those fees beyond what they would be in a more competitive market,” read the proposed class action suit, filed by advertising and marketing company All Wrapped Up Signs and Graphix. “Visa has monopolized the debit network on which debit card transactions run. It has entered into agreements to punish businesses that seek to use alternative networks or methods to process debit transactions.”
The suit added that Visa has entered into contracts “to pay off potential competitors” so that they do not develop products or networks that would upset “Visa’s debit network dominance.”
PYMNTS has contacted Visa for comment but has not yet received a reply.
The DOJ suit filed last week accuses Visa of hindering competition in the debit card market and suppressing alternatives, alleging that the company used exclusionary contracts and anticompetitive practices to maintain its market share dominance, leading to higher fees for merchants and consumers.
A statement from Visa General Counsel Julie Rottenberg provided to PYMNTS called the lawsuit “meritless.”
“Anyone who has bought something online, or checked out at a store, knows there is an ever-expanding universe of companies offering new ways to pay for goods and services,” Rottenberg said. “Today’s lawsuit ignores the reality that Visa is just one of many competitors in a debit space that is growing, with entrants who are thriving.”
Writing about the DOJ action earlier this week, PYMNTS CEO Karen Webster argued that the DOJ’s claims ignored “the well-documented explosion of payments innovation” seen in the U.S. over the last decade and a half.
“It’s as if the world has been suddenly taken over by a bunch of Rip Van Winkles who’ve been asleep for the last fifteen years — and think we’re still mainly paying with dollars and coins,” Webster wrote. “Overlooking the fact that the Durbin Amendment, passed in July of 2010, fixed debit interchange fees and required debit card issuers to offer a choice of two unaffiliated processing networks for merchants to route debit transactions.”