According to a document from the Manhattan federal court, the U.S. Department of Justice has filed an antitrust lawsuit against the credit card company Visa Inc. Visa is the world’s largest payment network operator.
On Tuesday, September 24th, the Department of Justice filed a lawsuit against Visa, accusing the financial giant of illegally stifling competition to maintain its monopoly position in the debit card market.
The U.S. government alleges that Visa punishes companies that seek to use alternative payment networks and bribes potential competitors to maintain its control over the market.
The lawsuit claims that Visa’s practice of offering bulk discounts to merchants violates the Antitrust Law. This strategy prevents merchants from conducting transactions through other often cheaper payment networks.
Federal law requires merchants to be able to choose from at least two unrelated debit card networks to process transactions. However, according to the government’s lawsuit, Visa punishes merchants who choose other payment channels and charges higher fees for all transactions processed through Visa payment channels.
The Department of Justice stated that Visa’s actions have hindered innovation and led to consumers and businesses in the U.S. paying significant additional costs.
Attorney General Merrick Garland stated, “Visa illegally acquired the power to charge fees well above the competitive market. Visa’s illegal behavior affects the price of not only one commodity but almost all commodities.”
In response to the latest lawsuit by the Department of Justice, Visa stated that the charges are “baseless” and they will defend themselves in court.
Visa’s General Counsel, Julie Rottenberg, said that businesses and consumers choose Visa because of its “secure and reliable network.”
“Today’s lawsuit ignores a reality, that Visa is just one of many competitors in the debit card field, which is continually expanding with new entrants flourishing,” she said.
“This lawsuit is baseless, and we will vigorously defend ourselves,” she added.
This is the latest antitrust lawsuit initiated by the Biden administration. The Biden administration has taken a more aggressive stance on antitrust issues involving large corporations than previous administrations.
In 2023, the antitrust division of the Department of Justice requested documents and information from Visa regarding its debit card business in the U.S. and competition with other payment networks.
The investigation launched in 2021 examined whether Visa engaged in anticompetitive practices in the debit card market. At that time, Visa stated that its debit card business complied with applicable laws.
According to the lawsuit, Visa processes over 60% of debit transactions in the U.S., generating $7 billion in fees annually. By 2022, its debit card business revenue surpassed its credit card division, including Mastercard, American Express, and Discover, with substantial profits.