New York, Sunday, October 6, 2024 –The US Department of Justice (DoJ) has filed an antitrust lawsuit against Visa, accusing the company of using its dominant market position to suppress competition in the debit payments sector.
A complaint filed against Visa alleges that the company’s debit network processes over 60% of debit transactions in the U.S., granting it a dominant market position.
This dominance, the complaint argues, allows Visa to charge more than $7 billion annually in processing fees.
Debit cards, typically issued by banks, enable users to directly access funds in their checking accounts. Payment companies like Visa act as facilitators for these transactions.
Filed in a Manhattan federal court, the lawsuit alleges Visa has created a “web of exclusionary agreements” with banks and merchants, penalizing customers whose transactions are processed through rival networks.
Attorney General Merrick Garland claimed Visa’s practices allow it to charge excessively high fees, resulting in increased costs for consumers.
Visa, which handles more than 60% of U.S. debit transactions, described the lawsuit as “meritless,” emphasizing that the payments market is highly competitive with numerous alternatives, such as PayPal, Apple Pay, and Square. Despite Visa’s defense, the complaint alleges the company’s dominance has negatively impacted consumers by inflating prices on goods and services.
The DoJ claims Visa built an “enormous moat” around its business through partnerships with banks and retailers, offering incentives to secure loyalty or threatening hefty fees for non-compliance.
Such practices, the DoJ argues, effectively eliminate competition.
Visa’s stock dropped by 5.5% following news of the lawsuit. The company has previously faced legal challenges, including the DoJ’s 2020 lawsuit to block its acquisition of fintech firm Plaid, which ultimately led to the merger’s cancellation.
