Visa, Mastercard Deny Litany of Allegations in Home Depot Complaint
Visa and Mastercard have refuted a bevy of allegations levied in an antitrust lawsuit file by the Home Depot in June, according to court documents filed by the card networks last month. Both companies are requesting the lawsuit be dismissed and that they receive compensation for attorneys’ fees and other costs.
Among the many allegations in Home Depot’s complaint, filed in U.S. District Court Northern District of Georgia, the retailer asserts Visa and Mastercard “unlawfully” fixed interchange fees at high levels. The lawsuit also claims the networks and their member banks “acted in concert” to avoid chip-and-PIN authentication in the U.S., which is less profitable than signature authentication, and prevents competition from PIN networks, which offer merchants more routing options and lower fees. Visa and Mastercard deny all of these allegations in their court documents (Visa filing, Mastercard filing).
In addition, Home Depot alleges that Visa and MasterCard “would punish” issuer banks that considered supporting PIN debit options by imposing “massive new fees” on them. Visa had announced that, starting April 2016, it would impose a new 5 basis points fee, called a Delayed De-Conversion Assessment (DDCA), on any card issuer that “indicated an intent to change its business status or network affiliation or that experienced a material decline in Visa payment volume.” And MasterCard was said to be “radically” increasing its “volume assessment” fee to penalize card issuers when volume is processed over PIN debit networks. Although Mastercard denies the allegation, Visa said that it announced a DDCA, but never implemented it.
Visa also imposed on merchants an up-front Fixed Acquirer Network Fee (FANF), which “merchants must pay to participate in the Visa network and accept any Visa credit or debit cards. A merchant can avoid this fee only by declining to accept any Visa products, which, given Visa’s market dominance, is a rare occurrence. But once a merchant has elected to accept any Visa products, that merchant can only mitigate the FANF by routing PIN debit transactions to Visa, rather than making a second payment to process a transaction over a rival PIN debit network,” according to Home Depot’s complaint. Visa did implement a FANF, which is assessed on acquiring banks based on factors, including the number of locations, transaction volume and type of cards accepted for each acquired merchant. However, Visa denies the remaining allegations.
Home Depot is asking the court to award damages caused by the misconduct of Visa and Mastercard, and that those damages be tripled in accordance with antitrust law. Home Depot also is asking that the court enjoin Visa’s FANF.