- US Justice Department sues Visa, accusing it of monopolizing the debit card market.
- Allegations claim the company stifled competition and charged excessive fees.
- The company denies claims, stating it faces strong competition in the payments sector.
The US Justice Department has launched a major antitrust lawsuit against Visa, accusing the company of monopolizing the debit card market for over a decade. The department alleges that the company has unfairly leveraged its dominant position to force businesses into using its payment network while stifling competition and blocking new market entrants.
According to the report, Attorney General Merrick Garland expressed concerns that the company’s actions have allowed it to charge exorbitant fees, which merchants and banks then pass on to consumers. “Visa’s unlawful conduct affects not just the price of one thing – but the price of nearly everything,” Garland noted, pointing out that the company’s influence impacts the overall market.
However, the company swiftly responded to the lawsuit, calling the claims baseless. Julie Rottenberg, Visa’s general counsel, emphasized that the company faces increasing competition in the payment space, particularly with the rise of online payment systems. Rottenberg stated that “the lawsuit ignores the reality that Visa is just one of many competitors in a growing debit market.”
This lawsuit is part of a broader effort by the Justice Department to crack down on antitrust violations. Recently, the department has taken action against companies in various sectors, including a real estate firm allegedly inflating rents and Ticketmaster’s parent company, Live Nation. Notably, in 2020, the department also sued to block the company’s attempt to acquire fintech startup Plaid for $5.3 billion—a merger that was eventually abandoned.
Allegations of Visa’s Exclusivity Agreements and Market Control
The new complaint highlights the company’s significant control over debit card transactions, with over 60% of such transactions in the US processed through Visa’s network. The Justice Department claims Visa charges more than $7 billion in processing fees annually, adding that the company maintains its market dominance through exclusivity agreements and by offering financial incentives to potential competitors to partner rather than compete.
Merchants have long criticized Visa’s fees, and a group of merchants reached a $30 billion settlement with Visa and Mastercard in March. However, the settlement faced opposition from the National Retail Foundation, which argued the compensation was insufficient. A federal judge rejected the settlement in June, stating the credit card companies needed to make further concessions.
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