U.S. Sues Financial Giant, Visa, Over Debit Card Market Monopoly
The DOJ claims Visa penalizes merchants and banks that don’t use its payment processing technology, even though alternatives exist.
Visa is facing legal action from the U.S. Justice Department, which filed an antitrust lawsuit accusing the financial giant of stifling competition in the debit card market.
The complaint, filed on Tuesday, alleges that Visa’s dominance in the industry has cost consumers and businesses billions, Associated Press reports.
The DOJ claims Visa penalizes merchants and banks that don’t use its payment processing technology, even though alternatives exist.
“We allege that Visa has unlawfully amassed the power to extract fees that far exceed what it could charge in a competitive market,” said Attorney General Merrick B. Garland.
According to the DOJ, Visa controls 60% of debit transactions in the U.S., generating over $7 billion in fees annually. Garland further stated, “Merchants and banks pass along those costs to consumers, either by raising prices or reducing quality or service.
As a result, Visa’s unlawful conduct affects not just the price of one thing – but the price of nearly everything.”
This lawsuit adds to the Joe Biden administration’s efforts to combat anticompetitive behavior. Visa’s dominance makes it difficult for merchants to use lower-cost payment processors without facing “disloyalty penalties,” according to the DOJ.
The DOJ previously blocked Visa’s attempt to acquire financial startup Plaid for $5.3 billion, describing it as a monopolistic takeover. Visa has also been under investigation by the department since 2021.
KBW analyst Sanjay Sahrani estimates that the lawsuit’s financial impact would affect at most 10% of Visa’s U.S. debit revenue, calling it “a very limited impact on revenue growth.”
Visa has not yet comment on the lawsuit. Shares of Visa fell by 4.7%, or $13.53, to $275.10 in afternoon trading.
