The Department of Justice (DOJ) filed an antitrust lawsuit against Visa. In the suit, it accused the company of monopolizing the debit card market through anticompetitive practices. The government claimed these actions have potentially cost consumers and businesses billions of dollars.
U.S. Attorney General Merrick Garland said that Visa controls over 60% of U.S. debit transactions. He said the alleged monopoly allowed the company to charge $7 billion annually in processing fees.
The DOJ alleged that Visa abused its dominant position for over a decade by forcing businesses to use its network and blocking new alternatives from entering the market.
“We alleged that to maintain this monopoly power, Visa deploys a web of unlawful and anticompetitive agreements to penalize merchants and banks for using competing payment networks,” Garland said. “At the same time, it coerces would-be market entrants into unlawful agreements not to compete by threatening high fees if they do not cooperate and promising big payoffs if they do. The result is a debit market where Visa has unlawfully amassed the power to extract fees that far exceed what it could charge in a competitive market. Merchants and banks pass those costs to consumers.”
The DOJ’s lawsuit reveals a range of alleged anticompetitive practices employed by Visa to maintain its market dominance.
Visa allegedly penalizes merchants and banks that opt for alternative payment processing technologies and imposes volume commitments on merchants, banks and financial institutions that issue debit cards. It also reportedly offers monetary incentives to potential competitors to become partners instead of rivals.
The DOJ argued that Visa’s practices inflated prices across a wide range of goods and services. Additionally, it argued Visa stifled competition through exclusivity agreements.
As a consequence, consumers may face higher prices or reduced quality of goods and services as businesses attempt to offset Visa’s fees.
Visa has not yet commented on the lawsuit.
