The US Department of Justice (DOJ) has taken a significant step in its effort to curb anti-competitive practices, filing an antitrust lawsuit against Visa. The lawsuit, filed on Tuesday, alleges that Visa has engaged in various anti-competitive behaviors that have allowed it to maintain its dominant position in the debit card market.
The DOJ claims that Visa, which processes over 60% of debit transactions in the United States, has used questionable agreements with card issuers, merchants, and potential competitors to suppress competition. These practices, according to prosecutors, have enabled Visa to collect approximately $7 billion annually in fees from debit transactions routed through its network.
The lawsuit alleges that Visa’s anti-competitive behavior began around 2012, following reforms that required card issuers to accommodate unaffiliated networks. The DOJ claims that Visa then entered into agreements with potential fintech competitors like Apple, PayPal, and Square (now Block Inc.) to prevent them from releasing products that could threaten Visa’s market position.
Visa, in a statement, vehemently denied the allegations, maintaining that its practices are legitimate and driven by the secure and reliable network it provides. Julie Rottenberg, Visa’s general counsel, stated that the company intends to contest the lawsuit vigorously.
The lawsuit is part of a broader initiative by the Biden administration to address rising consumer prices, a key issue in the upcoming presidential election. Attorney General Merrick Garland emphasized the far-reaching impact of Visa’s alleged conduct, stating, “Visa’s unlawful conduct affects not just the price of one thing, but the price of nearly everything.”
The legal action seeks to prohibit Visa from imposing pricing structures that discourage competition and paying rivals not to compete. The DOJ aims to restore competition in the debit payment processing market for both online and in-store transactions.
This lawsuit is the latest in a series of legal challenges faced by Visa and its rival Mastercard over their dominance in the payment card market. Both companies have been involved in litigation for nearly two decades and have already set aside substantial funds for potential settlements related to interchange fees.
The outcome of this antitrust lawsuit could have significant implications for the payment processing industry and potentially lead to changes in how debit transactions are handled in the United States. The legal battle is expected to be closely watched by consumers, businesses, and industry players alike.
