Discover’s Pulse Network Settles Antitrust Suit Against Visa

Discover’s Pulse Network has settled a 10-year-old antitrust suit against Visa.

Pulse had accused Visa of preventing competition in the debit card network services market, thus raising fees for merchants.

The two companies revealed their agreement in a court filing Friday (June 14), flagged in a report by Reuters.

Pulse said the case was dismissed with prejudice, meaning it cannot refile the suit. The filing did not contain terms of the settlement.

PYMNTS has contacted both companies for comment but has not yet gotten a reply.

As covered here in 2022 — during the appeals process for this case — Pulse had claimed that a “fixed acquirer network fee (FANF)” created by Visa violates federal antitrust law.

“Instead of charging merchants only a per-transaction fee, Visa began charging them a fixed monthly fee for using its debit network,” that report said. “Merchants must pay this up-front fee so long as they accept payment from any Visa product during the month.”

Pulse argued that the incentives created by this pricing structure, and Visa’s position in the market, made it impossible for merchants to refuse to pay the fixed monthly fee, as they can’t stop accepting Visa cards.

Visa countered that Pulse is hurt only by the increased competition created by the cheaper per-transaction fees instead of some anti-competitive aspect of the price structure.

The agreement between the two firms comes days after reports that a federal judge was poised to reject a $30 billion settlement between Visa, Mastercard and retailers reached in March but still needing court approval.

During a recent hearing, Judge Margo Brodie of the U.S. District Court of the Eastern District of New York indicated that she likely won’t approve the deal, according to a Bloomberg News report. The judge has not officially ruled but said she would issue a written decision within days.

“The court’s comments strongly suggest that she won’t accept the settlement,” Bloomberg Intelligence analyst Justin Teresi said in the report. “While Judge Brodie doesn’t seem convinced that larger retailers should be allowed to opt out from the settlement, provisions like changes to digital wallet acceptance rules and some state bans on surcharges likely present real adequacy issues.”

When Visa and Mastercard reached the settlement with merchants in March, all sides agreed the deal would end years of litigation around swipe fees and restrictions on merchants.

But weeks later, the National Retail Federation asked a federal judge to quash the proposed settlement, saying the deal was reached without the input of major retailers or trade associations and that it fails to deal with “anti-competitive practices.”