Case 4:20-cv-07810-KAW Document 1 Filed 11/05/20 Page 1 of 23
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`JOHN R. READ (DC Bar #419373)
`MEAGAN K. BELLSHAW (CA Bar #257875)
`CORY BRADER LEUCHTEN (NY Bar # 5118732)
`SARAH H. LICHT (DC Bar #1021541)
`United States Department of Justice, Antitrust Division
`450 Fifth Street, NW, Suite 4000
`Washington, DC 20530
`Telephone: (202) 307-0468
`Facsimile: (202) 514-7308
`E-mail: john.read@usdoj.gov
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`[Additional counsel listed on signature page]
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`Attorneys for Plaintiff United States of America
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`UNITED STATES DISTRICT COURT
`NORTHERN DISTRICT OF CALIFORNIA
`SAN FRANCISCO DIVISION
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`Plaintiff
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` Case No.:
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`COMPLAINT
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`UNITED STATES OF AMERICA,
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`v.
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`VISA INC. and PLAID INC.,
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` Defendants.
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`Visa seeks to buy Plaid – as its CEO said – as an “insurance policy” to neutralize a
`“threat to our important US debit business.” Visa is a monopolist in online debit transactions,
`extracting billions of dollars in fees annually from merchants and consumers. Plaid, a financial
`technology firm with access to important financial data from over 11,000 U.S. banks, is a threat
`to this monopoly: it has been developing an innovative new solution that would be a substitute
`for Visa’s online debit services. By acquiring Plaid, Visa would eliminate a nascent competitive
`threat that would likely result in substantial savings and more innovative online debit services for
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`Case 4:20-cv-07810-KAW Document 1 Filed 11/05/20 Page 2 of 23
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`merchants and consumers. For the reasons discussed below, the proposed acquisition violates
`Section 2 of the Sherman Act, 15 U.S.C. § 2, and Section 7 of the Clayton Act, 15 U.S.C. § 18,
`and must be stopped.
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`INTRODUCTION
`1.
`Visa is “everywhere you want to be.”1 Its debit cards are accepted by the vast
`majority of U.S. merchants, and it controls approximately 70% of the online debit transactions
`market. In 2019, there were roughly 500 million Visa debit cards in circulation in the United
`States. That same year, Visa processed approximately 43 billion debit transactions, including
`more than 10 billion online transactions. In 2019, Visa earned over $4 billion from its debit
`business, including approximately $2 billion from online debit.
`2.
`American consumers increasingly make purchases online, attracted by the
`convenience of being able to shop any time, from anywhere, with fast delivery. In recent years,
`online transactions have experienced “explosive” growth, a trend that has only been accelerated
`by the COVID-19 pandemic, with online sales growing more than 30% between the first and
`second quarters of 2020.
`3.
`American consumers use debit cards to purchase hundreds of billions of dollars of
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`goods and services on the internet each year. Many consumers buying goods and services online
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`either prefer using debit or cannot access other means of payment, such as credit. Because of its
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`ubiquity among consumers, merchants have no choice but to accept Visa debit despite perennial
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`complaints about the high cost of Visa’s debit service.
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`4.
`Visa’s monopoly power in online debit is protected by significant barriers to entry
`and expansion. Visa connects millions of merchants to hundreds of millions of consumers in the
`United States. New challengers to Visa’s monopoly would thus face a chicken-and-egg
`quandary, needing connections with millions of consumers to attract thousands of merchants and
`needing thousands of merchants to attract millions of consumers. Visa’s Chief Financial Officer
`has acknowledged that building an extensive network like Visa’s is “very, very hard to do” and
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`“takes many years of investment,” but “[i]f you can do that, then you can have a business [like
`Visa’s] that has a relatively high margin.” He explained that entry barriers are so significant that
`even well-funded companies with strong brand names struggle to enter online debit.
`5.
`Mastercard, Visa’s only longstanding rival in online debit services, has a much
`smaller market share of around 25%. For years, Mastercard has neither gained significant share
`from Visa nor restrained Visa’s monopoly. Mastercard’s participation in the online debit market
`has not translated into lower prices for consumers, and this appears unlikely to change. For
`example, Visa has long-term contracts with many of the nation’s largest banks that restrict these
`banks’ ability to issue Mastercard debit cards. Visa also has hamstrung smaller rivals by either
`erecting technical barriers, or entering into restrictive agreements that prevent rivals from
`growing their share in online debit, or both.
`6.
`These entry barriers, coupled with Visa’s long-term, restrictive contracts with
`banks, are nearly insurmountable, meaning Visa rarely faces any significant threats to its online
`debit monopoly. Plaid is such a threat.
`7.
`Plaid is uniquely positioned to surmount these entry barriers and undermine
`Visa’s monopoly in online debit services. Plaid powers some of today’s most innovative
`financial technology (“fintech”) apps, such as Venmo, Acorns, and Betterment. Plaid’s
`technology allows fintechs to plug into consumers’ various financial accounts, with consumer
`permission, to aggregate spending data, look up balances, and verify other personal financial
`information. Plaid has already built connections to 11,000 U.S. financial institutions and more
`than 200 million consumer bank accounts in the United States and growing. These established
`connections position Plaid to overcome the entry barriers that others face in attempting to
`provide online debit services.
`8.
`While Plaid’s existing technology does not compete directly with Visa today,
`Plaid is planning to leverage that technology, combined with its existing relationships with banks
`and consumers, to facilitate transactions between consumers and merchants in competition with
`Visa. Like Visa’s online debit services, Plaid’s new debit service would enable consumers to
`pay for goods and services online with money debited from their bank accounts. With this new
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`Case 4:20-cv-07810-KAW Document 1 Filed 11/05/20 Page 4 of 23
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`online debit service, Plaid intended to “steal[] share” and become a “formidable competitor to
`Visa and Mastercard.” Competition from Plaid likely would drive down prices for online debit
`transactions, chipping away at Visa’s monopoly and resulting in substantial savings to merchants
`and consumers.
`9.
`Visa feared that Plaid’s innovative potential – on its own or in partnership with
`another company – would threaten Visa’s debit business. In evaluating whether to consider
`Plaid as a potential acquisition target in March 2019, Visa’s Vice President of Corporate
`Development and Head of Strategic Opportunities expressed concerns to his colleagues about the
`threat Plaid posed to Visa’s established debit business, observing: “I don’t want to be IBM to
`their Microsoft.” This executive analogized Plaid to an island “volcano” whose current
`capabilities are just “the tip showing above the water” and warned that “[w]hat lies beneath,
`though, is a massive opportunity – one that threatens Visa.” He underscored his point by
`illustrating Plaid’s disruptive potential:
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`10.
`Several months later, Visa had the opportunity to acquire Plaid. While
`conducting extensive due diligence, Visa’s senior executives became alarmed to learn about
`Plaid’s plans to add a “meaningful money movement business by the end of 2021” that would
`compete with Visa’s online debit services. This prompted Visa’s CEO to conclude that Plaid
`was “clearly, on their own or owned by a competitor going to create some threat to our important
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`US debit business” and to tell his CFO that purchasing Plaid would be an “insurance policy to
`protect our debit biz in the US.”
`11.
`In making the case to buy Plaid to Visa’s Board of Directors, Visa’s senior
`leadership estimated a “potential downside risk of $300-500M in our US debit business” by 2024
`should Plaid fall into the hands of a rival. Visa understood that could create an “[e]xistential risk
`to our U.S. debit business” and that “Visa may be forced to accept lower margins or not have a
`competitive offering.”
`12.
`On January 13, 2020, Visa agreed to acquire Plaid in part to eliminate this
`existential risk and protect its monopoly in online debit. Visa offered approximately $5.3 billion
`for Plaid, “an unprecedented revenue multiple of over 50X” and the second-largest acquisition in
`Visa’s history. Recognizing that the deal “does not hunt on financial grounds,” Visa’s CEO
`justified the extraordinary purchase price for Plaid as a “strategic, not financial” move because
`“[o]ur US debit business i[s] critical and we must always do what it takes to protect this
`business.”
`13. Monopolists cannot have “free reign to squash nascent, albeit unproven,
`competitors at will.” United States v. Microsoft Corp., 253 F.3d 34, 79 (D.C. Cir. 2001).
`Acquiring Plaid would eliminate the nascent but significant competitive threat Plaid poses,
`further entrenching Visa’s monopoly in online debit. As a result, both merchants and consumers
`would be deprived of competition that would drastically lower costs for online debit transactions,
`leaving them with few alternatives to Visa’s monopoly prices. Thus, the acquisition would
`unlawfully maintain Visa’s monopoly in violation of Section 2 of the Sherman Act.
`14.
`Visa’s proposed acquisition also would violate Section 7 of the Clayton Act,
`which was “designed to arrest the creation of monopolies ‘in their incipiency,’” United States v.
`Gen. Dynamics Corp., 415 U.S. 486, 505 n.13 (1974), and similarly prohibits a monopolist from
`bolstering its monopoly through an acquisition that eliminates a nascent but significant
`competitive threat. The Supreme Court has explained that an acquisition can violate Section 7
`when “the relative size of the acquiring corporation ha[s] increased to such a point that its
`advantage over its competitors threaten[s] to be ‘decisive.’” Brown Shoe Co. v. United States,
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`370 U.S. 294, 321 n.36 (1962). Visa already has a decisive market position through its online
`debit monopoly, and would unlawfully extend that advantage by acquiring Plaid. For the reasons
`set forth in this Complaint, the proposed acquisition must be enjoined.
`JURISDICTION
`15.
`The United States brings this action under Section 15 of the Clayton Act, as
`amended, 15 U.S.C § 25, and Section 4 of the Sherman Act, 15 U.S.C. § 4, to prevent and
`restrain Visa from violating Section 2 of the Sherman Act, 15 U.S.C. § 2, and Defendants from
`violating Section 7 of the Clayton Act, 15 U.S.C. § 18. This Court has subject matter jurisdiction
`over this action under Section 15 of the Clayton Act, 15 U.S.C § 25, Section 4 of the Sherman
`Act, 15 U.S.C. § 4, and 28 U.S.C. §§ 1331, 1337.
`16.
`Defendants Visa and Plaid are engaged in interstate commerce and in activities
`substantially affecting interstate commerce. Visa and Plaid sell online debit and data aggregation
`services throughout the United States. They are engaged in a regular, continuous, and substantial
`flow of interstate commerce, and their sales have had a substantial effect on interstate commerce.
`17.
`This Court has personal jurisdiction over each Defendant. Both Visa and Plaid
`are corporations that transact business within this District through, among other things, their
`sales of online debit transactions and data aggregation services.
`VENUE
`18.
`Venue is proper in this district under Section 12 of the Clayton Act, 15 U.S.C.
`§ 22 and 28 U.S.C. § 1391. Both Defendants are headquartered and transact business in this
`judicial District.
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`INTRADISTRICT ASSIGNMENT
`19.
`Assignment to the San Francisco Division is proper. This action arises in San
`Francisco County because a substantial part of the events that gave rise to the claims occurred in
`San Francisco. Plaid’s headquarters and principal place of business is located in San Francisco.
`Visa’s headquarters are in San Mateo County; Visa has offices in San Francisco and is building
`new headquarters in San Francisco.
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`DEFENDANTS AND THE PROPOSED ACQUISITION
`20.
`Visa Inc. is a Delaware company headquartered in Foster City, California. Visa is
`a global payments company that operates the largest debit network in the United States. Visa
`provides a two-sided transactions platform that authorizes, clears, and settles debit transactions
`between businesses, consumers, and banks. Visa reported revenues of approximately $23 billion
`in fiscal year 2019, including $10.3 billion in the United States.
`21.
`Plaid Inc. is a Delaware company headquartered in San Francisco, California.
`Plaid operates the leading financial data aggregation platform in the United States. Its
`technology allows consumers to connect their bank account information to fintech apps, which
`enables fintechs to aggregate consumer spending data, look up account balances, and verify other
`personal financial information with consumer permission. Plaid’s revenues have been growing
`rapidly and were almost $100 million in 2019.
`22.
`On January 13, 2020, Defendants announced that Visa would acquire all of
`Plaid’s voting securities for consideration valued at approximately $5.3 billion.
`BACKGROUND
`23.
`A debit transaction involves a multi-step process that results in the transfer of
`funds from a consumer’s bank account into a merchant’s bank account using the consumer’s
`bank account credentials. When a consumer makes an online purchase using their debit card
`credentials (i.e. a debit card number, expiration date, and CVV/CVC number on the back of a
`debit card), a debit transaction withdraws funds from the consumer’s bank account. The online
`merchant uses the consumer’s credentials to send a request to the merchant’s bank (the
`“acquiring” bank or “acquirer”), which in turn uses the debit network to send a request to the
`consumer’s bank (the “issuing bank” or “issuer”) to confirm whether the issuer will authorize the
`transaction. The issuer will typically authorize the transaction if there is a sufficient account
`balance to fund the transaction. If the transaction is authorized, the consumer’s bank places a
`hold on the consumer’s funds.
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`24.
`Debit networks – Visa, Mastercard, and a handful of smaller networks – operate
`the systems that transmit these messages. Once the consumer’s issuing bank authorizes the
`transaction, the debit network also guarantees the funds to the merchant. Debit networks
`typically do not issue cards directly to consumers or establish card-accepting services with
`merchants. The debit networks typically contract with the acquiring and issuing banks, which in
`turn contract with merchants and consumers, respectively. The debit network also clears and
`oversees the interbank settlement process by aggregating all transactions each day for each bank
`in its system, netting out applicable fees, and providing daily settlement reports to the banks.
`With few exceptions, the debit networks are not themselves banks and do not move money;
`rather, the networks’ settlement reports are used by the banks to transfer funds among
`themselves, typically using a wire service available only to banks.
`A.
`Visa is a Monopolist in Online Debit Services
`25.
`Visa is a monopolist among providers of online debit services, with a durable
`market share of approximately 70%.
`26.
`Visa’s next closest rival is Mastercard, which is around one-third the size of Visa
`in online debit. Mastercard has not constrained Visa’s monopoly power by forcing it to lower
`prices to merchants and consumers. Merchants that accept debit payments have no choice but to
`accept Visa. In contrast to credit cards, most consumers carry only one debit card. A consumer
`with a Visa debit card cannot use a Mastercard debit card to withdraw funds from the same
`checking account.
`27.
`Visa has secured long-term contracts with many of the largest financial
`institutions in the United States, fortifying the barriers that help maintain its monopoly. These
`contracts limit these financial institutions’ ability to issue debit cards from Mastercard, Visa’s
`only meaningful competitor for card issuance. Visa understands that Mastercard has little ability
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`to displace Visa’s relationships with those financial institutions and consequently little ability to
`grow its share of consumers’ wallets.
`28. Merchants are charged two types of fees by Visa and its partner banks, both set by
`Visa: the “network” fees Visa collects to process the transaction, and the “interchange” fees that
`Visa compels merchants to pay the banks that issue Visa-branded debit cards. Taken together,
`the debit network and interchange fees that Visa and its partner banks collect cost U.S.
`merchants and consumers more than $6 billion per year.
`29. While consumers do not pay Visa directly to use its payment network – and
`relatively few earn significant rewards on Visa debit transactions – consumers indirectly pay for
`Visa’s transaction fees in the price of the goods and services they buy from merchants. In this
`way, Visa’s excessive debit fees operate as a tax on merchants that is passed on to consumers
`and burdens the entire economy.
`30.
`Recognizing the burden imposed by high debit fees and the barriers to
`competition in the market for debit transactions, Congress sought to “correct the market defects
`that were contributing to high and escalating fees” with the Durbin Amendment of the 2010
`Dodd-Frank Wall Street Reform and Consumer Protection Act, Pub. L. No. 111-203, 124 Stat.
`1376 (2010). The Durbin Amendment aimed to reduce high fees charged by debit networks with
`a regulatory cap and increase the number of meaningful debit competitors.
`31.
`But the Durbin Amendment caps only interchange fees that accrue to Visa’s large
`issuing banks, and does not regulate the network fees that accrue to Visa. As a result, Visa has
`responded by imposing new fees on merchants that undermine the effectiveness of the Durbin
`Amendment’s fee caps. Even after enactment of the Durbin Amendment, Visa estimates that it
`earns an 88% operating margin from its network fees on debit payments, illustrating its durable
`monopoly power.
`32.
`The Durbin Amendment also requires Visa and Mastercard debit cards to include
`a feature that allows merchants to process transactions using one of the so-called “PIN” debit
`networks. These smaller PIN networks, such as Accel, Star, NYCE, and Pulse, have some
`meaningful presence for in-person debit transactions, but have yet to overcome the barriers to
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`entry for online transactions. This is in part because Visa has erected technological barriers
`(such as Visa’s tokenization service, which withholds essential data from PIN networks) and
`entered into restrictive agreements that disincentivize the use of PIN networks. As a result,
`merchants do not use PIN networks in any significant volume to process online transactions, and
`instead pay higher fees to use Visa and Mastercard networks.
`B.
`Pay-by-Bank is a New Form of Online Debit Service that Threatens Visa’s
`Monopoly
`33.
`For the first time in many years, a new type of payments service is poised to take
`share away from Visa’s online debit business. Pay-by-bank is a form of online debit that uses a
`consumer’s online bank account credentials (i.e. a consumer’s online banking username and
`password) – rather than debit card credentials – to identify and verify the user, bank, account
`number and balance, and facilitate payments to merchants directly from the consumer’s bank
`account.
`34.
`Pay-by-bank debit services are already widely available in other countries. A
`pay-by-bank platform facilitates consumer-to-business payments by providing equivalent end-to-
`end functionality as the Visa debit network: it authorizes payment from a consumer’s bank
`account, facilitates communications with the consumer’s bank to clear the transaction, and
`provides settlement services by initiating a payment to the merchant’s financial institution. Pay-
`by-bank debit services can complete this final transfer of funds using Automated Clearing House
`(“ACH”) or another low-cost alternative to Visa’s debit network.
`35.
`ACH enables settlement of transactions through money transfers over a network
`managed by two utility-like operators, one run by the Federal Reserve and the other operated by
`The Clearing House, which is owned by a consortium of banks. A pay-by-bank debit transaction
`using ACH settlement is usually much less expensive than a debit transaction processed by a
`card network like Visa.
`36.
`Banks typically charge merchants flat rates ranging from two ($0.02) to twenty-
`five cents ($0.25) for ACH transactions, whereas Visa debit transactions typically cost twenty-
`two cents ($0.22) plus a percentage of the overall value of the transaction, which can be
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`significant. For example, merchants and consumers typically pay roughly thirty-nine cents
`($0.39) to process a $60 debit transaction (the average online debit transaction size) through
`Visa’s network, compared to as little as two cents ($0.02) through ACH, a 95% savings. By
`harnessing these savings using its best-in-class technology and existing relationships with banks
`and consumers, Plaid stands to save merchants and consumers hundreds of millions of dollars
`per year in debit fees.
`C.
`Plaid is Uniquely Situated to Challenge Visa
`37.
`Plaid’s technology currently provides an easy interface for fintech apps to collect
`consumers’ financial data, with consumer permission. When a consumer signs up with a Plaid-
`supported fintech app and provides her bank log-in credentials, Plaid uses those credentials to
`access the consumer’s financial institution and obtain the consumer’s financial data, which it
`transmits back to the fintech app. The data Plaid retrieves ranges from basic identifying
`information, such as account and routing numbers, to detailed transaction history and close to
`real-time account balance information. This data allows fintech apps to offer personal financial
`management tools, manage bill payments or other expenses, support loan underwriting, and
`transfer funds, among other uses. Plaid’s services can also be used to reduce fraud by verifying
`the consumer’s identity and account balance, examining the consumer’s bank account history,
`assuring that a transaction is bona fide, and confirming that there are sufficient funds to cover a
`transaction at the time of payment.
`38.
`Plaid is uniquely positioned to offer a pay-by-bank debit service that would
`compete with Visa’s online debit services. Plaid already supports over 2,600 fintech apps,
`including 80% of the largest such apps in the United States, and has a network of more than
`11,000 U.S. financial institutions. Plaid also connects to over 200 million consumer bank
`accounts through its existing services. Plaid’s extensive existing connections with banks and
`consumers gives Plaid a substantial competitive advantage that cannot be easily replicated by
`other firms. It also helps Plaid surmount the chicken-and-egg barrier faced by potential entrants
`to online debit: Plaid already connects with millions of consumers’ debit accounts, making them
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`an attractive partner for merchants looking for an alternative payments provider that has already
`built scale among consumers.
`39.
`According to Visa, Plaid “has created a leading position of strength in the
`business of connecting financial institutions in the United States” and is “the preferred connector
`company by developers.” Plaid is regarded by the industry as the best of breed among
`companies that provide similar services; no Plaid competitor provides the same high-quality
`connections to such a large number of fintech customers or financial institutions. Plaid’s fintech
`customers are likely to stick with Plaid because they face substantial switching costs once they
`integrate with Plaid.
`40.
`Plaid plans to build on the success of its current services by creating an “end-to-
`end payments network that enables instantly-guaranteed money movement” in a system “similar
`to Visa and Mastercard, but focused on bank-linked payments.” Plaid’s online pay-by-bank
`debit service would compete against Visa’s online debit services. Plaid’s service would give
`Plaid and other fintechs the capability to make a seamless pay-by-bank debit transaction, by
`providing a fraud risk score service, bank transfer service, and a consumer-facing interface
`allowing a consumer to easily switch from a debit card to pay-by-bank debit services during the
`online checkout process. Plaid has seen “strong interest from the field” for its fraud risk score
`and bank transfer services and is piloting them with multiple fintech customers.
`41.
`Plaid’s development of its own end-to-end pay-by-bank debit service directly
`threatens Visa’s online debit business. Once deployed, Plaid’s service would provide a reliable,
`less-expensive method of online debit payments by enabling consumers and merchants to
`transact for goods and services.
`D.
`Visa Intends to Buy Plaid to Extinguish this Threat and Protect its U.S.
`Online Debit Monopoly
`42.
`Visa made an initial investment in Plaid in early 2019. Through that investment,
`Visa executives learned more about Plaid and came to understand that Plaid posed a significant
`threat to Visa’s debit business. Several months later, in September 2019, one of Plaid’s co-
`founders telephoned Visa’s President to inform him that Plaid was putting itself up for sale and
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`that Visa should expect to pay around $5 billion if it wanted to acquire Plaid. Visa saw that it
`had to act or risk Plaid falling into the hands of a rival that could use Plaid to compete against
`Visa in online debit.
`43.
`Visa set to work verifying what makes Plaid a unique competitive threat. It
`identified Plaid’s particular strengths through due diligence, spending thousands of hours
`reviewing all aspects of Plaid’s business. Visa also confirmed that no other firm was in a
`position to replicate or displace Plaid. As Visa’s Chief Product Officer explained, Plaid “has a
`head start in a network business and have been a highly compelling and attractive developer
`value proposition with 40% of American banks accounts enrolled – in the US they have a
`network moat.” This view was shared by Visa’s CEO, who described Plaid as “by far the best
`player in the space” with “a huge lead in the connector business.”
`44.
`As Visa learned more about Plaid’s efforts to launch its own pay-by-bank debit
`service that would directly compete with Visa, its executives grew increasingly alarmed. During
`an early November 2019 meeting involving executives from both firms, Plaid’s co-founder
`explained how Plaid’s nascent technology would allow merchants to shift transactions easily
`from traditional forms of online debit to Plaid’s pay-by-bank debit service. This prompted a
`senior Visa executive to report internally that Plaid’s co-founder had “described the service with
`the joy of someone who forgot we had 70% share.” Ultimately, Visa recognized that the best
`course of action for its business was to eliminate Plaid as a competitive threat by purchasing
`Plaid itself. In internal documents, a Visa executive observed that “[t]he acquisition is in part
`defensive, not just for Visa but also on behalf of our largest issuing [bank] clients, whom we
`believe have a lot to lose if [pay-by-bank transactions] accelerate as the result of Plaid landing in
`the wrong hands. It is in our collective interest to manage the evolution of these payment forms
`in a way that protects the commercial results we mutually realize through card-based
`payments.”
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`E.
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`Visa Has a History of Impeding Entry and Expansion into Online Debit
`Services
`45.
`Visa’s proposed acquisition of Plaid fits within an established pattern of Visa
`trying to thwart others from challenging its monopoly power. Specifically, Visa has a long
`history of protecting its monopoly in online debit by entering into contracts that forestall entry
`and coopt would-be rivals with lucrative partnerships. In addition to locking up many of the
`largest U.S. financial institutions with long-term, restrictive contracts that limit these banks’
`ability to issue debit cards from Visa competitors, Visa has entered into a number of
`“partnerships” that benefit Visa at the expense of merchants and consumers. This conduct has
`prevented cheaper, more efficient online debit options from gaining traction.
`46.
`For example, in 2016, PayPal sought to divert business from traditional online
`debit providers like Visa by using lower-cost payment methods that moved money via ACH. In
`response, Visa publicly threatened to target PayPal “in ways people have never seen before.”
`After issuing its threats, Visa induced PayPal to stop promoting alternative payment methods and
`to instead promote Visa debit in exchange for significant financial benefits. As Visa’s Senior
`Vice President and Head of Product for North America explained, PayPal has been less of a
`threat to Visa’s online debit business in recent years because “Visa and PayPal have figured out a
`way to be partners, as opposed to, sort of, direct competitors” and have found “ways to work
`together, as opposed to not work together.”
`47.
`In another example, Visa induced a major technology company to agree not to
`“build, support or introduce payment technologies that disintermediate Visa” in exchange for
`substantial fee reductions. In current negotiations to renew this ongoing agreement, Visa is
`demanding that the technology company continue to abide by Visa’s exclusionary practices,
`including not encouraging customers to use less expensive payment methods and prohibiting
`“marketing to non Visa options during payment checkout.”
`48.
`Similarly, Visa recently pushed a large payment processor to limit its use of
`alternative payment methods because of the “strategic risk” those alternative payment methods
`present to Visa.
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