This week, the Trump administration appointed a new antitrust chief, Omeed Assefi. While cable news talking heads continue to obsess over the theatrics of the sudden personnel change — the reasons why his predecessor, Gail Slater, was fired or stepped down — the real question they should be asking is one of public policy. Namely, will Assefi focus his enforcement on maximizing the welfare of consumers — the standard for decades before Biden came along?
Say what you will about the Trump administration — yes, it still spends too much money, and yes, it still overregulates the economy — it deserves credit for jettisoning all the Biden administration's scapegoating of the private sector for inflation in a very short amount of time.
However, one major relic of the Bien inflation blame-game period remains: the Biden Justice Department’s lawsuit against “debit card inflation."
As a Professor of Law and Economics, this politically motivated suit never sat well with me, and with all of the other Biden-era suits that have already been dismissed, I’m surprised to see that this one is still on the docket.
Biden’s DOJ announced it was suing Visa six weeks before the 2024 presidential election, torching the company for its supposed “exclusionary and anticompetitive conduct” that “imposes enormous costs on consumers, merchants, and the American economy.”
Make no mistake: This was just another excuse to blame a faceless large corporation for the inflationary problem that were the federal government’s making
The Biden-era complaint warns darkly about Visa’s operating margins in North America and mentions that its debit business in the United States earns more than its credit business—as if this was proof of guilt.
The truth is that, while blaming private sector companies like Visa for inflation may have played well before the election, none of the Biden administration's claims were true here.
Consumers and businesses know this. That’s why they are spoiled for choice in the debit market. There’s quite a spread of debit card networks to choose from. And alternative payment networks are growing in popularity too, with Zelle processing more than $1.2 trillion in payments last year—up 20 percent from the previous year. PayPal had nearly $1.8 trillion in transactions.
With these platforms challenging Visa’s market share, the company must innovate and deliver value, or its market share will decline. That’s the free market at work, and it’s a much better corrective than the heavy hand of government feeling around for false monopolies.
The Trump administration under its new antitrust leadership should drop the case against Visa. There’s nothing nefarious about how Visa operates—and consumers are hardly locked into the network. The cost of switching debit providers is practically zero.
Debit payments are a relatively recent innovation. They only started to gain traction in the 1990s, as the Federal Reserve notes, but by the mid-2000s they were recording more transactions than credit cards. From 2005-2024, the purchase volume of Visa’s debit cards increased from $554 billion to nearly $4 trillion.
Punishing Visa with an antitrust violation would threaten this entire payments ecosystem. Debit companies would grow fearful that Washington bureaucrats would punish them for their success and become less likely to innovate and offer services. This paralysis would hurt vulnerable consumers—those with lower incomes are more likely to rely on debit cards than credit cards.
The most likely outcome of the Visa antitrust suit is a consent decree that would see a massive restructuring of Visa’s debit card operations by government bureaucrats. Given Visa’s stature, the broader result would be a debit market with massive inefficiencies, less innovation, and more fraud—all in the name of “protecting” consumers.
In medicine, when a potential remedy causes an illness or makes one worse, it’s called iatrogenic. That’s the inevitable outcome of government-engineered fixes to the debit card market.
The Biden bureaucrats who filed suit against Visa have a deep distrust of the private sector and operated under the belief that success was somehow sinister.
Asseffi should act now to withdraw the Visa suit. That way the debit market writ large can continue doing what it’s been doing: delivering convenient financial transactions for millions of consumers every day.
