The Justice Department filed a lawsuit against Visa on Tuesday, accusing the company of monopolizing the debit card market while “charging significant fees and stifling competition.” File Photo by Joerg Carstensen/EPA
Sept. 25 (UPI) — The U.S. Justice Department is suing Visa for monopolizing the debit card market while “charging significant fees and stifling competition.”
The civil antitrust lawsuit, filed Tuesday in the U.S. District Court for the Southern District of New York, accuses Visa of violating sections 1 and 2 of the Sherman Act as more than 60% of debit transactions in the United States run on Visa’s debit network. Visa charges more than $7 billion in fees each year to process those transactions.
“We allege that Visa has unlawfully amassed the power to extract fees that far exceed what it could charge in a competitive market,” said Attorney General Merrick Garland.
“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,” Garland added.
The Justice Department said it filed Tuesday’s lawsuit to restore competition and to benefit the American public, as it accused Visa of using exclusionary practices to safeguard its business in the debit market.
Visa, which is headquartered in San Francisco, has a global operating income of $18.8 billion, according to the lawsuit, and charges about $8 billion in network fees on U.S. debit volume every year. Globally, Visa processes $12.3 trillion in total payment volume.
“Anti-competitive conduct by corporations like Visa leaves the American people and our economy worse off,” said Principal Deputy Associate Attorney General Benjamin Mizer.
“Today’s action against Visa reminds those who would stifle competition rather than competing on price or investing in innovation that the Justice Department will never hesitate to enforce the law on behalf of the American people,” Mizer warned.
This is not the first time Visa has faced legal action by the U.S. government. Four years ago, the Justice Department filed a lawsuit to block Visa from acquiring fintech company, Plaid. The lawsuit claimed Visa’s $5.3 billion purchase was a strategic move to prevent Plaid from infringing on its debit card business. The companies dropped the planned merger.
“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,” Visa’s general counsel Julie Rottenberg countered in a statement.
“We are proud of the payments network we have built, the innovation we advance and the economic opportunity we enable.”
