US Dept of Justice sues Visa over monopoly allegations

Visa accused of stifling debit card market competition by penalising businesses for using alternative payment networks

The US Department of Justice (DoJ) has filed an antitrust lawsuit against Visa, accusing the financial giant of maintaining an illegal monopoly in the debit card market.

The lawsuit, filed in a New York federal court, alleges that Visa suppressed competition by penalizing businesses that sought to use alternative payment networks and paid off potential rivals to secure its dominant position.

Attorney General Merrick Garland stated that Visa’s practices have stifled competition, leading to higher fees for merchants and consumers.

He emphasized that Visa’s dominance has enabled the company to extract fees far exceeding what would be possible in a truly competitive market.

These costs, he said, are passed down to consumers through higher prices or reduced quality of goods and services.

The lawsuit claims Visa’s alleged anticompetitive behavior affects “the price of nearly everything.”

Visa, which processes more than 60% of debit card transactions in the US and generates approximately $7 billion annually from related fees, rejected the allegations.

Julie Rottenberg, Visa’s general counsel, described the lawsuit as “meritless,” asserting that Visa is just one of many competitors in a growing debit card space and pledging to defend the company vigorously.

The case stems from a 2021 investigation into Visa’s practices, with the DoJ citing contracts that allegedly forced merchants to route a certain volume of transactions through Visa's network, threatening them with higher fees if they did not comply.

Visa’s practices reportedly began after reforms in 2012 that required banks to support multiple payment networks for debit cards.

In addition to merchants, Visa is also accused of pressuring tech companies like PayPal, threatening them with high fees unless they agreed to process payments through Visa’s network.

This lawsuit marks the latest effort by the Biden administration to crack down on monopolistic practices, part of its broader agenda to address rising consumer prices and promote market competition.

Visa’s alleged actions fall in line with similar antitrust challenges faced by other major corporations in the financial and tech sectors.

The Justice Department is seeking to end Visa’s “anticompetitive” practices and restore competition in the debit card market, both online and in physical stores.

Visa, valued at over $500 billion, saw its stock fall nearly 5% following news of the lawsuit.

This is not Visa’s first legal challenge over its market dominance.

The company, along with rival Mastercard, previously settled a class-action lawsuit in 2019 by paying US merchants $5.6 billion to resolve claims of anticompetitive practices.