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The U.S. Justice Department (DOJ) filed an antitrust lawsuit Tuesday in the Southern District of New York against Visa, accusing the credit card giant of abusing its market dominance to stifle competition in the debit card sector and inflate costs for consumers and businesses.
The complaint alleges that Visa leverages its substantial network to unfairly penalize merchants and banks that opt for alternative payment processors, which are often less expensive, according to the press release. About 60% of debit transactions in the United States run on Visa’s debit network, processing over $7 billion in fees annually.
“We allege that Visa has unlawfully amassed the power to extract fees that far exceed what it could charge in a competitive market,” Attorney General Merrick B. Garland said in a statement. “Merchants and banks pass along those costs to consumers, either by raising prices or reducing quality or service. As a result, Visa’s unlawful conduct affects not just the price of one thing – but the price of nearly everything.”
WATCH: The US Department of Justice plans to file a lawsuit against Visa, the world’s largest payments network operator, alleging that the company illegally monopolized the country’s debit card market https://t.co/knZs4gz2tr pic.twitter.com/L0MpSVF6Ow
— Reuters Business (@ReutersBiz) September 24, 2024
The complaint details how Visa imposes restrictions on volume commitments and engages in practices that effectively prevent competitors from entering the market. This includes forming partnerships with potential rivals to hinder competition, reminiscent of the thwarted $5.3 billion acquisition of fintech startup Plaid in 2020, which the DOJ blocked, citing concerns over market monopolization.
The DOJ has launched several significant legal initiatives, including a case against a real estate firm for conspiring to increase rent prices and a lawsuit against Live Nation for monopolistic practices, and successfully proved that Google‘s search operations violated federal antitrust laws, CNN reported.
“Anyone who has bought something online, or checked out at a store, knows there is an ever-expanding universe of companies offering new ways to pay for goods and services,” said Julie Rottenberg, Visa’s general counsel, in a statement, CNN reported. “Today’s lawsuit ignores the reality that Visa is just one of many competitors in a debit space that is growing, with entrants who are thriving.”
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