Case 1:20-cv-02495-MKB-JO Document 1 Filed 06/04/20 Page 1 of 61 PageID #: 1
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`IN THE UNITED STATES DISTRICT COURT
`EASTERN DISTRICT OF NEW YORK
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`CASE NO. _________________
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`Plaintiff
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`EXXON MOBIL CORPORATION
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`v.
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`VISA INC., VISA U.S.A INC.,
`VISA INTERNATIONAL SERVICE
`ASSOCIATION, MASTERCARD
`INCORPORATED, and MASTERCARD
`INTERNATIONAL INCORPORATED
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`Defendants
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`PLAINTIFF’S ORIGINAL COMPLAINT
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`Plaintiff Exxon Mobil Corporation (“Plaintiff”) complains of Visa Inc., Visa U.S.A. Inc.,
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`Visa International Service Association (collectively, “Visa”), MasterCard Incorporated and
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`MasterCard International Incorporated (collectively, “MasterCard”) (Visa and MasterCard
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`collectively referred to as the “Networks” or “Defendants”) as follows:
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`INTRODUCTION AND NATURE OF THE ACTION
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`1.
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`The Defendants have conspired, combined, and made agreements to restrain
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`trade. Visa and MasterCard manage, coordinate, and govern a combination with member banks,
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`including BA Merchant Services LLC (f/k/a National Processing, Inc.), Bank of America
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`Corporation, Barclays Bank of Delaware, Capital One, N.A., Capital One Bank (USA), N.A.,
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`Capital One Financial Corporation, Chase Bank USA, N.A., JPMorgan Chase Bank, N.A.,
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`JPMorgan Chase & Co., Citibank N.A., Citigroup, Inc., Fifth Third Bancorp, First National Bank
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`of Omaha, HSBC Finance Corporation, HSBC North America Holdings, Inc., PNC Financial
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`Services Group, Inc., SunTrust Banks, Inc., SunTrust Bank, Texas Independent Bancshares, Inc.,
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`Wells Fargo & Company, and Wells Fargo Merchant Services, LLC (collectively, the “Banks”),
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`in restraint of trade within the meaning of the Sherman Antitrust Act. The Banks are (and their
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`predecessors were) members of both the Visa and MasterCard networks, and as such issue both
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`Visa-branded and MasterCard-branded credit and debit cards. The Banks are independently
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`owned and managed banks and financial institutions that issue credit and debit cards to
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`consumers, but they have agreed to abide by the rules of Visa and MasterCard that forbid the
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`Banks’ competing for merchant acceptance of the credit and debit cards they issue.
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`2.
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`The Banks issue two main categories of payment cards: credit cards and debit
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`cards. Credit cards are payment cards that allow consumers to make purchases on credit and
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`include charge cards that the full balance to be paid upon receipt of the billing statement. Debit
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`cards, on the other hand, function more like checks and either draw quickly from a consumer’s
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`demand account or are prepaid.
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`3.
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`The Banks earn income on credit cards through fees and charges to the
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`cardholder, interest charges on the amount of credit being extended, and from fees and penalties
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`for late payment on card balances. Banks earn income on debit cards through the opportunity to
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`use the funds on deposit in the related accounts and on various fees associated with those
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`accounts. The Banks also earn income on credit and debit cards through the interchange fees paid
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`by merchants. Interchange fees are imposed on merchants by Visa and MasterCard for the
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`privilege of accepting a credit or debit card as a means of payment, and such fees are paid
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`directly by merchants to the bank that issued the card used as a form of payment. The
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`profitability to issuing banks of credit and debit cards directly increases with the size and
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`frequency of transactions in which the cards they have issued are used.
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`4.
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`The Banks compete with one another to issue cards to consumers (sometimes
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`referred to hereafter as “cardholders”) who use those cards to purchase goods and services from
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`merchants. For example, issuing banks offer cards with various combinations of interest rates,
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`annual fees, cash back rewards, points, and other features to compete for cardholders and to
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`induce cardholders to use their cards. The member banks, including the Banks, do not, however,
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`compete with each other for preferential acceptance by merchants at the point of sale as they
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`should. Competition for such preferential treatment would have resulted in lower prices for both
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`merchants and cardholders, including by giving discounts or other benefits to preferred
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`cardholders at the point of sale. Such competition would also enhance the value of these cards to
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`cardholders by stimulating innovation and providing more choices.
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`5.
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`Visa and MasterCard have adopted nearly identical rules, which are agreed to by
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`their member banks, including the Banks, and which are imposed on merchants that accept cards
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`issued by those banks. These rules, or Competitive Restraints, eliminate competition among the
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`member issuing banks for merchant acceptance of credit and debit cards. Nearly all card issuers
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`in the United States are members of Visa and MasterCard, and as a consequence of their
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`agreeing to rules that preclude them from independently competing for merchant acceptance,
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`Visa and MasterCard and their members have obtained and maintained market power in the
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`markets for merchant acceptance of credit and debit cards in the United States, and alternatively,
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`in the markets for merchant acceptance and cardholder issuance of credit and debit cards in the
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`United States. The exercise of this market power has enabled the Defendants to force merchants
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`to pay excessive interchange and network fees. In this manner, the Defendants have unlawfully
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`restrained and continue to unlawfully restrain competition in the credit card and debit card
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`markets.
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`6.
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`The principal rules that constitute the Competitive Restraints are the Honor All
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`Cards Rules, the All Outlets Rules, the No Discount Rules, and the No Surcharge Rules. These
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`rules, individually and in combination, have (a) denied merchants the benefits of competition as
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`to the terms, including a fee (if any), for the acceptance of cards of particular issuing banks and
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`(b) preclude card issuers from competing for merchant acceptance of their cards. As a
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`consequence, the setting of “default” interchange fees effectively fixes the price of acceptance at
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`artificially high levels. Plaintiff has paid and continues to pay significantly higher costs to accept
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`Visa-branded and MasterCard-branded credit and debit cards in payment for their sales than they
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`would if the banks issuing such cards competed for merchant acceptance.
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`7.
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`Because of their participation in the Competitive Restraints through their
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`membership in Visa and MasterCard, the Banks do not compete for transaction volume by
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`independently competing for merchant acceptance of the cards they issue.
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`8.
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`While Visa and MasterCard nominally refer to their interchange fee schedules as
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`setting “default” amounts, suggesting it is possible for issuing banks and merchants to bargain
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`for different interchange rates, the Competitive Restraints prevent such bargained agreements.
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`By setting and enforcing artificially high interchange fees applicable to all merchants that accept
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`cards issued by their members, Visa and MasterCard act as agents of the Banks for the purposes
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`of exercising the market power gained by their combinations.
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`9.
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`If freed of the imposition of “default” interchange fees and the Competitive
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`Restraints, issuing banks and merchants would operate in competitive markets, and merchants
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`would benefit from such competition through lower interchange fees. Collectively set
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`interchange fees do not protect merchants such as Plaintiff or cardholders, but rather allow
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`issuing banks, such as the Banks, to charge interchange fees far in excess of their costs. In
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`competitive markets, interchange fees would move to competitive levels, and the interchange
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`fees paid by Plaintiff would be substantially below the amounts it has paid since January 1, 2004
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`if the fee would have been charged at all. And if merchants had the ability to use competitive
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`strategies with respect to their acceptance of the cards of individual issuers, they would induce
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`competition among issuing banks that would lead to far lower interchange fees. The resulting
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`lack of competition for preferential treatment by merchants at the point of sale also increases
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`costs, stifles innovation, limits choices, and reduces value for cardholders. The Competitive
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`Restraints have thus harmed both merchants, who pay supracompetitive interchange fees, and
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`cardholders, who both pay higher prices and receive card services of diminished quality and
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`choice.
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`10.
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`The Visa Defendants’ and MasterCard Defendants’ agreements not to compete
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`and price-fixing schemes are naked restraints of trade and per se violations of the Sherman
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`Antitrust Act.
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`11.
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`Even if the Visa Defendants’ and MasterCard Defendants’ conduct is analyzed
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`under the rule of reason, the substantial harm to competition caused by the cartels violates the
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`Sherman Antitrust Act as an unreasonable restraint of
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`trade. None of Defendants’
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`anticompetitive rules and practices is reasonably necessary for the functioning of the credit and
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`debit card networks. Any benefits that Defendants claim are achieved by these restraints of trade
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`can be accomplished by means that are less destructive and harmful to competition. Even if
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`Defendants’ restraints have any procompetitive benefit, their anticompetitive effects—massive
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`overcharges to merchants and their customers, higher prices and card services of diminished
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`quality and choice for cardholders, and maintenance of substantial market power—vastly
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`outweigh any such benefit.
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`12.
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`The anticompetitive harm to merchants and consumers from Defendants’ price
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`fixing and other anticompetitive conduct has been staggering. During the Damages Period,
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`Defendants imposed interchange fees estimated at more than $450 billion on merchants in the
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`United States. Defendants’ anticompetitive conduct has also injured competition in the credit and
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`debit card markets by depriving market participants of lower prices as well as innovative new
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`payment options and cost-saving approaches (e.g., to reduce fraud) that would have substantially
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`benefitted U.S. merchants and consumers.
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`13.
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`Plaintiff has paid tens of millions of dollars in credit and debit interchange fees to
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`issuing banks that are members of Visa and MasterCard since 2004. Interchange fees are one of
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`Plaintiff’s largest operating expense items. Elimination of the Competitive Restraints and
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`restoration of competitive markets for merchant acceptance of credit cards and debit cards would
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`substantially reduce interchange fees, allowing Plaintiff to operate more efficiently and at lower
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`costs, to its benefit and the benefit of its customers, including cardholders. Plaintiff operates in
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`an intensely competitive market and would use the savings from a reduction in its interchange
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`fee costs to increase their competitiveness by enhancing the value its customers and cardholders
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`receive.
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`DEFINITIONS
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`14.
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`For purposes of this Complaint, the following definitions apply.
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`a.
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`b.
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`“Acquiring bank” or “Acquirer” means a member of Visa and/or
`MasterCard that acquires payment transactions from merchants and acts as
`a liaison between the merchant, the issuing bank, and the Payment-Card
`Network to assist in processing the payment transaction. Visa and
`MasterCard rules require that an acquiring bank be a party to every
`merchant contract. In a typical payment transaction, when a customer
`presents a Visa or MasterCard card for payment, the merchant relays the
`transaction information to the acquiring bank. The acquiring bank then
`contacts the issuing bank via the network for authorization based on
`available credit or funds.
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`“Credit cards” are payment cards enabling the cardholder to purchase
`goods or services from any merchant that has an agreement to accept such
`cards. The credit cards at issue here are general purpose payment cards, as
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`distinguished from private label cards, which can only be used at a single
`merchant. Payment to a merchant for the goods or services purchased
`using a credit card is made by the issuing bank of the card on behalf of the
`cardholder, with repayment by the cardholder subject to an agreement
`between the issuing bank and the cardholder. Credit cards enable a
`cardholder to obtain goods or services from a merchant on credit provided
`by the card issuer. Credit card issuers compete for consumers by offering a
`variety of terms and types of cards, which vary by level of rewards, that
`are intended to induce consumers to use their cards. Cards with a higher
`level of rewards are often referred to as “premium” cards and carry higher
`interchange fees, though they afford no additional benefits to merchants.
`Credit cards include charge cards, which allow the cardholder to obtain
`goods or services on credit but require payment in full on a regular basis.
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`“Debit cards” are payment cards that allow holders of accounts at the
`issuing bank to pay for goods or services or to obtain cash by directly
`accessing their accounts. They also include pre-paid cards, which require
`prepayment of the amount that can be drawn by the user of the card. There
`are two methods of authenticating debit cards. PIN debit cards require the
`cardholder to enter a four-digit personal identification number (PIN) to
`authenticate the cardholder. Signature debit cards usually require the
`cardholder’s signature at the time of the transaction. In the past, some PIN
`debit cards did not carry interchange fees or were subject to reverse
`interchange fees — meaning the merchant received a fee for card
`acceptance. Signature debit cards generally carry higher interchange fees,
`some of which equal the interchange fees charged for credit card
`transactions.
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`“Interchange fee” is the fee that issuing banks are paid by merchants when
`they accept a credit card or debit card issued by a member of the Visa or
`MasterCard combinations. Interchange fees are deducted by an issuing
`bank from the funds owed to a merchant prior to the settlement of a Visa
`or MasterCard credit card or debit card transaction.
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`“Issuing bank” or “Issuer” means a member of Visa and/or MasterCard
`that issues Visa and/or MasterCard branded payment cards to consumers
`for their use as payment systems.
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`c.
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`d.
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`e.
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`THE PARTIES
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`Plaintiff’s principal place of business is in Irving, Texas. Plaintiff accepts both
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`15.
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`Visa and MasterCard debit and credit cards for payment. Accordingly, Plaintiff has been forced
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`to pay Defendants’ supracompetitive interchange fees and to abide by Defendants’ Competitive
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`Restraints. Plaintiff, therefore, has been injured in its business or property as a result of the
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`unlawful conduct alleged herein.
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`16.
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`Plaintiff timely opted out of the class action captioned: In re Payment Card
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`Interchange Fee and Merchant Discount Antitrust Litigation, Case No. 1:05-md-01720-JGJO,
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`United States District Court for the Eastern District of New York.
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`17. Until the corporate restructuring and initial public offering described below,
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`Defendant Visa International Service Association was a non-stock Delaware corporation with its
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`principal place of business in Foster City, California. Defendant Visa U.S.A. Inc. was a group
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`member of Visa International Service Association and was also a non-stock Delaware
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`corporation. Visa U.S.A. Inc. had its principal place of business in San Francisco, California.
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`Visa U.S.A. Inc.’s members were the financial institutions acting as issuing banks and acquiring
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`banks in the Visa system.
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`18. Defendant Visa Inc. is a Delaware corporation with its principal place of business
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`in San Francisco, California. Defendant Visa Inc. was created through a corporate reorganization
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`in or around October 2007. Visa U.S.A. Inc.’s member banks were the initial shareholders of
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`Visa Inc.
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`19.
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`Defendants Visa Inc., Visa U.S.A. Inc., and Visa International Service
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`Association are referred to collectively as “Visa” in this Complaint. The Visa entities may be
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`served with process through their registered agent.
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`20. Defendant MasterCard Incorporated was incorporated as a Delaware stock
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`corporation in May 2001. Its principal place of business is in Purchase, New York.
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`21. Defendant MasterCard International Incorporated was formed in November 1966
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`as a Delaware membership corporation whose principal or affiliate members were its financial
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`institution issuing banks and acquiring banks. Prior to the initial public offering described below,
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`MasterCard International Incorporated was the principal operating subsidiary of MasterCard
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`Incorporated.
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`22.
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` Defendants MasterCard Incorporated and MasterCard International Incorporated
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`are collectively referred to as “MasterCard” in this Complaint. MasterCard Incorporated may be
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`served with process upon its registered agent.
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`CO-CONSPIRATORS
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`23.
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`The United States Court of Appeals for the Second Circuit has noted that Visa and
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`MasterCard “are not single entities; they are consortiums of competitors.” Before the corporate
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`restructuring described below, they were “owned and effectively operated by over 22,000 banks,
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`which compete with one another in the issuance of Payment Cards and the acquiring of
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`Merchants’ transactions.” United States v. Visa, 344 F.3d 229, 242 (2d Cir. 2003). Because of the
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`judgment in that case, among other things, Visa and MasterCard and their member banks were
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`exposed as “structural conspiracies” and “walking conspiracies.”
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`JURISDICTION AND VENUE
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`24.
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`The United States Federal Court for the Eastern District of New York has subject
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`matter jurisdiction over the Defendants in this case. The amount in controversy substantially
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`exceeds the jurisdictional requirements of the Court.
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`25.
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`The Federal District Court for the Eastern District of New York has personal
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`jurisdiction over Defendants and constitutes proper venue for a trial of this matter because, inter
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`alia, Defendants have: (a) systematically transacted business throughout the Eastern District of
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`Texas for years; (b) committed a substantial part of the violations and damages described in this
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`Complaint in the State of New York; and (c) engaged in an illegal anticompetitive scheme that
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`was directed at and had the intended effect of causing injury to Plaintiff which is located in and
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`does business throughout New York, including in the Eastern District of New York.
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`26.
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`Jurisdiction and venue for pre-trial matters are proper in the Federal District Court
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`for the Eastern District of New York pursuant to the Judicial Panel on Multidistrict Litigation
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`Transfer Order dated August 3, 2017.
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`FACTS
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`27. Before the Visa and MasterCard IPOs in 2006 and 2008, respectively, the Banks,
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`acting as members of Visa by and through the Visa Board of Directors, fixed uniform
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`interchange fees for various merchants and transactions for all Visa credit card and debit card
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`transactions that they agreed to impose upon merchants and their customers.
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`28.
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`The Banks, acting by and through the Board of Directors of MasterCard, then set
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`similar uniform interchange fees for various merchants and transactions for all MasterCard credit
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`card and debit card transactions that they agreed to impose upon merchants and their customers.
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`29.
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`The Banks also jointly set interchange fees in both Visa and MasterCard networks
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`to ensure that the interchange fees of Visa and MasterCard increased in parallel and stair-step
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`fashion, rather than decreasing in response to competition from each other.
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`30. MasterCard and Visa each changed their ownership structures through initial
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`public offerings wherein the member banks partially divested their ownership of Visa and
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`MasterCard. But the IPOs did not change the essential character of their combinations or the
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`Competitive Restraints. The motivation for these IPOs was to limit the appearance that Visa and
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`MasterCard were controlled by their member banks. According to the prospectus for
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`MasterCard’s 2006 IPO, “heightened regulatory scrutiny and legal challenges” underlay the
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`decision to make changes in the ownership structure of MasterCard. In particular, MasterCard
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`stated that “many of the legal and regulatory challenges we face are in part directed at our
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`current ownership and governance structure in which our customers — or member financial
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`institutions — own all of our common stock and are involved in our governance by having
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`representatives serve on our global and regional boards of directors.”
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`31.
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`Each Bank (and all Visa and MasterCard owner/member banks) knew that all
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`other Visa and MasterCard banks were also delegating their pricing decisions to Visa and
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`MasterCard, which arrangement was ratified by a horizontal agreement of Visa’s and
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`MasterCard’s owner/member banks when they voted to approve Visa’s and MasterCard’s IPO
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`restructurings on these bases on the express condition that the rules that form the core of the
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`conspiracy remain in effect for all issuing banks and acquiring banks in the Visa and MasterCard
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`systems. This was a conscious commitment to an ongoing common scheme by horizontal
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`competitors and, as such, is a continuing violation of the Sherman Antitrust Act. It maintained
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`the anti-competitive, pre-IPO status quo: Visa and MasterCard continue to set interchange fees
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`for thousands of competing banks that, but for these conspiracies, would have independently
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`competed for merchant acceptance of their payment cards.
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`32. After the IPOs, neither Visa, MasterCard, nor any of the member banks, including
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`the Banks, took any affirmative action to withdraw from the respective combinations. To the
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`contrary, even after the IPOs, the member banks of Visa and MasterCard continued to agree to,
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`enforce and adhere to the Competitive Restraints that eliminate competition among issuing banks
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`for merchant acceptance.
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`33.
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`Bank documents show that the IPOs perpetuated the conspiracies—which
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`continue uninterrupted to this day. Visa CEO Charles Scharf conceded as much when, five years
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`after Visa’s IPO, he characterized Visa’s rules as having “stood in the way of [Issuers and
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`Acquirers] working together to do something positive for the merchant.” MasterCard’s rules also
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`barred such positive competition.
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`34.
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`The IPOs actually increased the effectiveness of Defendants’ price-fixing
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`conspiracies as well as Visa’s and MasterCard’s substantial market power by consolidating
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`decision-making and coordinating communications among the conspirators. Visa’s and
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`MasterCard’s economists opined in 1993—well before these IPOs were being considered—that
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`“[t]here would be far less competition in this industry if Visa and MasterCard had chosen to
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`operate as single companies.” David S. Evans and Richard L. Schmalensee, The Economics of
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`the Payment Card Industry, at 103 (1993).
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`35.
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` After the IPOs, as before, Visa and MasterCard serve as facilitators and
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`coordinators of horizontal agreements among their member banks to continue to adhere to and
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`enforce “default” interchange fees and the Competitive Restraints. The Banks and other member
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`banks continue to act as information conduits for the sharing of pricing and other competitive
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`information between the Visa and MasterCard networks, thereby ensuring that the networks’
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`interchange fees continue to increase in parallel and stair-step fashion. It would be contrary to
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`the independent self-interest of any single issuing bank to adhere to the Competitive Restraints
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`without the agreement of the remaining issuing banks also to impose and adhere to those
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`restraints. Visa and MasterCard, by acting as the managers of their respective combinations and
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`coordinating agreements to continue imposing and adhering to the Competitive Restraints,
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`eliminate competition for merchant acceptance among their respective issuing banks. But for the
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`arrangements facilitated by Visa and MasterCard and the agreement by the Banks to those
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`arrangements, the member banks would pursue their own independent self-interest by competing
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`for merchant acceptance of the cards they issue.
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`36. However, the member banks do not compete for merchant acceptance of the cards
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`they issue. Instead, both before and after the Visa and MasterCard IPOs, the member banks have
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`ceded to Visa and MasterCard decision-making and action with respect to the terms upon which
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`they will allow merchants to accept the cards they issue. By continuing to agree to and adhere to
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`the Competitive Restraints and default interchange fees, the member banks, including the Banks,
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`have deprived the marketplace of independent centers of decision-making and, therefore, of
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`actual or potential competition.
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`A.
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`
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`Antitrust Market Definition
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`37.
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`The relevant product markets are (1) the market for merchant acceptance of credit
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`cards and (2) the market for merchant acceptance of debit cards. Credit cards and debit cards are
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`not reasonably interchangeable with each other or with other forms of tender. These markets are
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`each part of two-sided platforms that involve (a) merchant acceptance of payment cards and (b)
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`banks issuing payment cards and gaining depository accounts. The market for merchant
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`acceptance of credit cards and the market for merchant acceptance of debit cards are in
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`themselves relevant markets even if the effects from the other side of the platforms (competition
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`for issuing payment cards and gain depository accounts) are considered.
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`38.
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`Banks compete with one another to issue their cards to consumers who use those
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`cards to purchase goods and services from merchants. But, like in the relevant markets for
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`merchant acceptance of credit cards and merchant acceptance of debit cards, competition for
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`issuing payment cards to consumers is constrained by the Competitive Restraints and
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`supracompetitive interchange fees. Absent the Competitive Restraints, banks issuing such cards
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`would compete over the terms of acceptance of their cards by merchants to get merchants to
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`accept their cards as payment for the goods and services the merchants sell to consumers and
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`thus enhance the value of these cards to cardholders, reduce cost of purchases, and increase
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`innovation. Therefore, anticompetitive effects exist on both sides of the two-sided platform.
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`39. A credit card is not interchangeable with a debit card or other form of tender, so
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`merchant acceptance of credit cards and merchant acceptance of debit cards are separate relevant
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`markets. Credit cards give cardholders the ability to access a line of credit, defer payment, and
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`other features that are not available through debit cards or other forms of tender. For this reason,
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`Plaintiff and other merchants cannot discontinue acceptance of credit cards without losing sales,
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`even in the face of high or increasing interchange fees. Visa and MasterCard and their credit card
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`issuing members are not constrained in the charges they impose for merchant acceptance of
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`credit cards by the availability of debit cards and other forms of tender as payment options.
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`Debit cards are also regulated separately and differently from credit cards. In 2011, pursuant to
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`the Durbin Amendment, the Federal Reserve Board imposed a maximum level for debit card
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`interchange fees charged by large banks. The legislation did not mandate that the Federal
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`Reserve Board regulate interchange fees charged in connection with credit card transactions.
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`40.
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`Likewise, in the market for merchant acceptance of debit cards, a debit card is not
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`interchangeable with a credit card or other form of tender. Debit cards must be tied to a bank
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`account, or be pre-paid, unlike credit cards. When a debit card is used, the funds are withdrawn
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`from the cardholder’s account either the same day or within a few days. Consumers who desire
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`to pay for a transaction with immediately available funds may not want to carry large amounts of
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`cash or checks on their person, and not all merchants accept checks. Consumers who cannot
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`qualify for credit cards or have reached the credit limit on their credit cards may also prefer the
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`use of debit cards to other options. Because credit cards are not a substitute for debit cards on the
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`cardholder side of this platform, Plaintiff and other merchants cannot discontinue acceptance of
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`
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`14
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`Case 1:20-cv-02495-MKB-JO Document 1 Filed 06/04/20 Page 15 of 61 PageID #: 15
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`debit cards, or substitute credit card acceptance for debit card acceptance without losing sales,
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`even in the face of high or increasing interchange fees. Visa and MasterCard and their debit card
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`issuing members are not constrained in the charges they impose for merchant acceptance of debit
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`cards by the availability of credit cards or other forms of tender.
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`41.
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`Even though merchant acceptance of credit cards and debit cards is one side of a
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`two-sided platform involving cardholders in payment transactions, the relevant markets here
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`should not include the separate markets for issuing credit cards and debit cards to consumers. As
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`explained supra, Visa and MasterCard operate as a 5-party payment card system, involving as
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`many as 5 distinct entities (cardholder, issuer, networks, acquirer, and merchant), and have
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`imposed horizontal restraints in the form of collusively set interchange fees. Visa and
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`MasterCard do not operate to set prices based on upon considerations of merchant and
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`cardholder demand. Rather, they facilitate and impose Competitive Restraints that prevent
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`member banks from competing for merchant acceptance of payment cards. In this context, the
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`Defendants’ Competitive Restraints and default interchange fees are not necessary to maintain
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`cardholder satisfaction and use. Visa and MasterCard member issuing banks are able to fund,
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`and would fund, rewards to cardholders from interest charged on cardholder account balances
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`and fees, which account for the vast majority of the issuing banks’ payment card revenues.1
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`42.
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`The relevant markets for merchant acceptance of credit cards and merchant
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`acceptance of debit cards in the subject 5-party system with horizontal restraints are readily
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`distinguished from the relevant market in a 3-party payment card system, for example, that
`
`
`1
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`As much as 90% of issuing bank revenue on card portfolios comes from interest
`on revolving balances and fees such as annual fees, over limit fees, late fees, bad check fees,
`cash advance transaction fees, foreign exchange fees, and fees for optional protection programs
`such as insurance. Issuing banks could use these significant sources of revenue to fund
`cardholder rewards, even with reduced or no interchange fee income.
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`15
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`Case 1:20-cv-02495-MKB-JO Document 1 Filed 06/04/20 Page 16 of 61 PageID #: 16
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`involves a single entity acting as issuer, network, and acquirer with vertical price restraints such
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`as rules imposed by American Express.
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`43.
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`However, depending on the facts presented at trial, because merchant acceptance
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`and cardholder issuance occur across a two-sided platform