The U.S. Justice Department has sued Visa, accusing the company of monopolizing the debit payments market and using its dominant position to eliminate potential competitors.
The antitrust lawsuit filed on Tuesday (Sep. 24) in Manhattan federal court, alleged that Visa “illegally maintains its monopoly power by insulating itself from competition,” while also coercing would-be competitors to become partners instead of entering the market as competitors.
The complaint further claims the financial company imposed a “web of exclusionary agreements” on merchants and banks, which penalized Visa’s customers for routing transactions through a different debit network or alternative payment systems, such as Apple or Google.
“Everybody is a friend and partner. Nobody is a competitor,” said an unnamed former Visa CFO quoted in the complaint.
US attorney-general Merrick Garland stated: “We allege that Visa has unlawfully amassed the power to extract fees that far exceed what it could charge in a competitive market.”
He added: “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.”
Visa says Justice Department claims are ‘meritless’
Julie Rottenberg, Visa’s general counsel, stated that competition in the debit market is thriving, describing the claims as baseless and asserting that the company will vigorously contest them.
Cited by Pymnts, she said: “When businesses and consumers choose Visa, it is because of our secure and reliable network, world-class fraud protection, and the value we provide.
“Today’s lawsuit ignores the reality that Visa is just one of many competitors in a debit space that is growing, with entrants who are thriving.”
She concluded: “This lawsuit is meritless, and we will defend ourselves vigorously.”
More than 60 percent of debit transactions in the U.S. are processed through Visa’s debit network, a position that allows the company to collect over $7 billion in processing fees annually, according to the complaint.
Debit cards, usually issued by banks, allow users to access funds directly from their checking accounts, while payment companies like Visa facilitate these transfers.
The company has faced legal challenges over the years. In 2020, the Department of Justice filed a civil antitrust lawsuit to prevent Visa’s acquisition of the tech firm Plaid. As a result, the two companies eventually abandoned the $5.3 billion merger.
However, Apple has also encountered issues with its payment system. The European Union discounted a charge against the company of pushing developers to use its in-app payment system.
ReadWrite has reached out to Visa for comment.
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