Pulse Can Pursue Antitrust Suit vs. Visa, U.S. Court Says

A NACS brief successfully supported Pulse in efforts to bring competition to debit-card transactions.

April 06, 2022

Visa Cards in a wallet

ALEXANDRIA, Va.—The U.S. Court of Appeals for the 5th Circuit Tuesday ruled in favor of Pulse Network LLC in its antitrust case against Visa Inc. alleging that the California-based credit card giant had employed a number of anticompetitive tactics to prevent Pulse from gaining a larger share of debit transactions—and preventing merchants from having competitive choices of which debit network to use on their transactions.

The ruling allows Texas-based Pulse, an ATM/debit payments network that’s a subsidiary of Discover Financial Services, to continue to press its case even though Visa had maintained that Pulse was legally barred from doing so. NACS, along with other associations, had filed an amicus brief in support of Pulse in the case.

Visa had argued that its tactics were fair and Pulse shouldn’t be able to sue, but the 5th Circuit concluded that “Pulse isn’t claiming that it’s losing a fair price war against Visa. Instead, it’s claiming that Visa has used its market dominance to strong-arm merchants into avoiding Pulse Pay Express.”

The court decided that Pulse could challenge both Visa’s implementation of its Fixed Acquirer Network Fee (FANF) and its volume-based agreements with banks and merchants.

NACS and other retailers have alleged similar antitrust theories against Visa in ongoing antitrust litigation in the U.S. District Court in the Eastern District of New York. And, the Department of Justice in the past has said it was investigating Visa’s FANF for its potential anticompetitive effects.

“The 5th Circuit’s decision validates the complaints that NACS and its members have long lodged: that Visa has abused its market power to reduce competition for debit transactions,” said Doug Kantor, NACS general counsel. “This decision should serve as a boost to the legal claims NACS and others have against Visa and help the Justice Department in its investigations.”

NACS was joined in its brief supporting Visa by the Food Marketing Institute, Merchant Advisory Group and National Retail Federation. The Retail Industry Leaders Association also collaborated with NACS and others to support the outcome in the case.

The 5th Circuit also ordered that the case be remanded to the District Court in Texas for further proceedings and that the case be reassigned to a new judge. That is a rare outcome which Pulse had urged in the case after maintaining that the original trial judge had been biased against it. The reassignment makes it more likely that Pulse will ultimately prevail in challenging Visa’s practices.