The U.S. Department of Justice (DOJ) has filed a lawsuit against Visa, accusing the financial giant of maintaining an illegal monopoly in the debit card market by stifling competition. The DOJ claims Visa punished companies that sought alternative payment networks and paid off potential competitors to preserve its dominance, actions that allegedly slowed innovation and led to higher fees for American consumers and businesses.
Visa, which processes over 60% of U.S. debit transactions, generates $7 billion in annual fees from its debit card business, which has grown to be more profitable than its credit card unit. According to the DOJ, Visa’s practices have harmed the market, allowing the company to charge fees significantly higher than those in a competitive environment.
Attorney General Merrick Garland stated that Visa’s conduct raised costs for consumers through merchants and banks, either by increasing prices or reducing quality of service. “Visa’s unlawful behavior affects the price of nearly everything,” he added.
In response, Visa’s general counsel, Julie Rottenberg, dismissed the lawsuit as “meritless,” asserting that Visa is just one of many competitors in a growing debit space. She emphasized that businesses and consumers choose Visa for its “secure and reliable network.”
The DOJ investigation into Visa began in 2021, focusing on the company’s alleged use of exclusive contracts that required businesses to route a certain volume of transactions through Visa’s network or face higher fees. The DOJ also accused Visa of using its market power to pressure tech firms like PayPal into agreements that would force payments through its system.
This legal challenge comes as part of the Biden administration’s broader push against monopolistic practices, taking a more aggressive approach to antitrust concerns compared to previous administrations. Visa has faced similar scrutiny from regulators and lawsuits in other regions, including Europe and Australia.
Though experts like George Alan Hay, a professor at Cornell Law School, acknowledge the DOJ’s case will be difficult, particularly in defining whether Visa’s 60% market share constitutes a monopoly, they believe Visa will be well-prepared for this litigation. Shares in Visa dropped over 5% following news of the lawsuit.
The DOJ has requested the court declare Visa a monopoly and halt its alleged anticompetitive practices.
