The Department of Justice is suing Visa, claiming the card issuer monopolizes the debit card market

NEW YORK, New York: The U.S. Department of Justice has filed an antitrust lawsuit against Visa, alleging that the company is using its market dominance to stifle competition in the debit card market, costing consumers and businesses billions.

The lawsuit alleged that Visa penalizes merchants and banks that choose not to use its payment processing technology despite the availability of alternatives. Visa charges fees for every transaction processed on its network, and according to the complaint, 60 percent of U.S. debit transactions occur on the Visa network, generating fees worth more than US$7 billion annually.

Attorney General Merrick Garland said Visa’s actions unlawfully allowed it to charge excessive fees, which merchants and banks pass on to consumers in the form of higher prices or reduced services. “Visa’s unlawful behavior affects not just the price of one thing, but the price of almost everything,” he said.

Visa’s general counsel, Julie Rottenberg, rejected the claims, arguing that the lawsuit ignored the competitive nature of the payments industry. She called the lawsuit “meritless” and vowed that Visa would “strongly” defend itself.

This legal action is part of the Biden administration’s broader campaign against companies that allegedly act as intermediaries, such as Live Nation and RealPage, as well as tech giants such as Apple and Google. Garland stressed that while Visa’s impact may not be as immediately visible as higher concert ticket prices or air travel, it is nonetheless harmful.

The Department of Justice’s complaint filed in the U.S. District Court for the Southern District of New York accuses Visa of using its vast transaction network to impose volume liabilities and “disloyalty penalties” on merchants, banks and financial institutions, making it difficult to switch to cheaper payment processors.

The lawsuit follows the Justice Department’s 2020 action to block Visa’s $5.3 billion acquisition of fintech startup Plaid, which was seen as an attempt to stifle a potential competitor. Ultimately, this agreement was canceled.

Since the pandemic, Visa has benefited from an increase in online purchases and increased card usage, even at businesses that traditionally use a lot of cash. Despite the lawsuit, analysts suggest Visa’s U.S. overdraft revenue is only a small portion of its overall business and may have a limited impact on its revenue growth.

Visa shares fell 5.5 percent, closing at $272.94 on September 24.