ECNETNews reports that the U.S. Department of Justice has initiated a civil antitrust lawsuit against Visa, alleging the company has monopolized debit network markets, breaching Sections 1 and 2 of the Sherman Act. The lawsuit, filed in the U.S. District Court for the Southern District of New York, contends that Visa’s substantial market dominance has facilitated anti-competitive behavior, stifling both choice and innovation within payment systems.
The complaint states that Visa commands over 60% of debit transactions in the United States, generating upwards of $7 billion annually from processing fees. The Justice Department argues that Visa is unlawfully leveraging its market dominance to suppress competition by imposing strict agreements on merchants and banks, penalizing them for opting for alternative debit networks. Such tactics purportedly reinforce Visa’s market stronghold while inhibiting the growth of smaller, more affordable competitors.
“We allege that Visa has unlawfully gained the power to impose fees that far exceed competitive rates,” stated a spokesperson for the Justice Department. “Merchants and banks often pass these added costs to consumers, resulting in higher prices and reduced quality or service across the board.” This conduct, they claim, exacerbates the overall cost of living for consumers.
The Department’s complaint portrays Visa as engaging in exclusionary practices designed to thwart competition by coercing potential competitors into partnerships through financial incentives and threats of punitive fees. These actions have purportedly resulted in billions of dollars in extra fees for American consumers and businesses while hampering innovation in the debit payment sector.
An associate attorney general emphasized the detrimental impact of Visa’s practices: “Anticompetitive actions by companies like Visa jeopardize the welfare of Americans and the overall economy. Today’s lawsuit serves as a reminder that the Justice Department is committed to upholding the law and protecting American consumers from unfair business practices.”
Visa’s dominance in both merchant and consumer segments of the debit market provides it with significant leverage. The complaint highlights that Visa’s exclusionary contracts impose hefty penalties on merchants and banks that do not commit to Visa’s payment rails for the majority of debit transactions, compelling them to depend heavily on Visa, even when more cost-effective options are available.
The Justice Department also pointed out Visa’s aggressive tactics against technology companies and fintech startups. Internal documents from Visa indicate that the company perceived these new entrants as threats. Rather than competing directly, Visa allegedly sought to forge partnerships with these potential rivals. In 2020, the Justice Department filed an antitrust lawsuit to obstruct Visa’s $5.3 billion acquisition of Plaid, a technology firm that was developing innovative online debit payment solutions. This proposed merger was eventually abandoned.
