The U.S. Department of Justice has launched an antitrust lawsuit against Visa, accusing the financial giant of leveraging its dominance to suppress competition in the debit card market, resulting in significant financial losses for consumers and businesses.
Filed on Tuesday, the complaint alleges that Visa penalizes merchants and banks that opt not to use its proprietary payment processing technology for debit transactions, despite the availability of alternatives. Visa reportedly earns additional fees from every transaction processed through its network.
According to the DOJ, Visa processes approximately 60% of debit transactions in the United States, generating over $7 billion in fees annually from these services.
Attorney General Merrick B. Garland stated, “We allege that Visa has unlawfully accumulated the power to impose fees that far exceed what could be charged in a competitive market. Merchants and banks pass these costs onto consumers, often leading to higher prices or diminished quality and service. Consequently, Visa’s alleged unlawful conduct impacts the cost of nearly everything.”
In response, Visa’s general counsel, Julie Rottenberg, contended that the lawsuit fails to recognize the growing number of companies offering alternative payment methods. “Today’s lawsuit overlooks the fact that Visa competes in a rapidly expanding debit market with numerous thriving entrants,” she stated, calling the lawsuit “meritless” and affirming the company’s intention to defend itself vigorously.
The Biden administration has taken a strong stance against U.S. companies it perceives as acting as middlemen, targeting entities such as Ticketmaster’s parent company Live Nation and the real estate software firm RealPage for imposing excessive fees and engaging in anti-competitive practices. Allegations of monopolistic behavior have also been levied against tech giants like Apple and Google.
Garland remarked during a Washington news conference, “While the harm from some of the Justice Department’s antitrust actions, like those involving air travel or concert tickets, is readily apparent, the damaging effects of Visa’s alleged anti-competitive behavior, though less visible, are equally detrimental.”
The DOJ’s complaint, submitted to the U.S. District Court for the Southern District of New York, claims that Visa uses its extensive transaction volume to impose volume commitments on merchants and their banks, making it challenging for them to consider alternative, potentially lower-cost payment processors without facing what the DOJ describes as “disloyalty penalties” from Visa. Additionally, the DOJ alleges that Visa has hindered competition by engaging in partnership agreements with potential rivals.
