Justice Department sues Visa, accusing it of monopoly on debit card payments

The Justice Department said Visa uses a system of carrots and sticks to scare off potential competitors and keep merchants away. The lawsuit, filed in the U.S. District Court for the Southern District of New York, says more than 60% of debit transactions occur on Visa’s network, allowing the company to collect more than $7 billion a year in processing fees.

“Visa maintains its dominant position not by competing on a level playing field, but by isolating itself from competitors through exclusionary and anticompetitive means,” the complaint reads. “Visa leverages its size, scale, and centrality in the debit ecosystem to penalize those who would switch to another debit network or to companies that could develop alternative debit products.”

The complaint alleges that Visa also uses additional payments to encourage potential competitors to “collaborate rather than innovate.” While this erodes immediate profits, Visa still pays these potential competitors to “mitigate the risk that they will develop innovative new technologies” that could threaten Visa’s superiority, according to a statement from the Justice Department.

Attorney General Merrick Garland said in a statement Tuesday after the antitrust lawsuit was announced that Visa’s actions have broader side effects.

“We allege that Visa has unlawfully amassed the authority to charge fees that far exceed what it could charge in a competitive marketplace,” he said. “Merchants and banks pass on these costs to consumers 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 almost everything.”

According to the Justice Department, Visa’s alleged anti-competitive practices have resulted in billions of dollars in additional fees for American consumers and businesses. The agency said the lawsuit aims to restore competition to the market.

Visa denounced the lawsuit as “meritless” and said it would defend itself “vigorously” in a statement released Washington Examiner.

CLICK HERE TO READ MORE IN THE WASHINGTON EXAMINER

“Today’s lawsuit ignores the fact that Visa is just one of many competitors in the debit space, which is growing, with new players thriving,” said Julie Rottenberg, Visa’s general counsel. “When businesses and consumers choose Visa, it’s because of our secure and reliable network, world-class fraud protection and the value we offer.”

In 2020, the Justice Department sued Visa to block it from acquiring Plaid for a planned $5.3 billion, also accusing Visa of a monopoly in the venture. The acquisition was later overturned.