The DOJ-Visa suit: Does it mean the end of free checking?
The U.S. Department of Justice lawsuit against Visa could affect banking institutions’ fee income from interchange and the role they play in the payments systems. Here’s why DOJ filed suit, how it wants to change Visa’s role in the marketplace, and the strategic implications that should be on banking executives’ minds.
In early October, the U.S. Department of Justice (DOJ) filed an antitrust lawsuit against Visa, calling into question how it retained and gained debit card market share in the post-Durbin era. Visa, the DOJ alleges, has created a “web of unlawful anti-competitive agreements to penalize” financial institutions, merchants and processors for using competing payment networks.
Setting aside whether Visa in fact has monopolized debit payments, executive teams and boards must determine how the suit could affect interchange revenue, checking account monetization, and even opportunities for institutions to play a greater role in payments.
Here are the key points of the DOJ suit and what the DOJ wants to change, and four questions for banking institutions to consider.
What is the DOJ’s claim?
The DOJ alleges the card network has squashed innovation, and limited the growth of lower cost debit alternatives from companies such as Apple, PayPal, and Block, through anticompetitive acts to increase, maintain, or protect its monopoly.
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