The U.S. Department of Justice filed a civil antitrust lawsuit against Visa alleging illegal monopolization of debit markets.
The complaint, filed in the U.S. District Court for the Southern District of New York, alleges that Visa illegally maintains a monopoly over debit network markets by using its dominance to thwart competitors and prevent innovation.
“We allege that Visa has unlawfully amassed the power to extract fees that far exceed what it could charge in a competitive market,” Attorney General Merrick Garland said Tuesday. “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.”
According to the complaint, more than 60% of debit transactions in the U.S. run on Visa’s debit network, allowing the company to charge over $7 billion in fees each year for processing transactions.
The complaint alleges that Visa keeps its monopoly power by insulating itself from competition. For example, Visa uses its dominance, enormous scale, and centrality to the debit ecosystem to impose a web of exclusionary agreements on merchants and banks, prosecutors said. These agreements penalize Visa’s customers who route transactions to a different debit network or alternative payment system. In so doing, the complaint alleges, Visa locks up debit volume, insulates itself from competition, and smothers smaller, lower-priced competitors. Visa also induces would-be competitors to become partners instead of entering the market as competitors by offering generous monetary incentives and threatening punitive additional fees.
Visa Inc. is a Delaware corporation based in San Francisco. It had a global operating income of $18.8 billion and an operating margin of 64% in 2022, according to the U.S. Department of Justice.
Julie Rottenberg, Visa’s general counsel, responded to the charges on Tuesday.
“Anyone who has bought something online, or checked out at a store, knows there is an ever-expanding universe of companies offering new ways to pay for goods and services,” she said. “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.
“When businesses and consumers choose Visa, it is because of our secure and reliable network, world-class fraud protection, and the value we provide. We are proud of the payments network we have built, the innovation we advance, and the economic opportunity we enable. This lawsuit is meritless, and we will defend ourselves vigorously.”
