Visa branded a "monopolist" as Justice Department launches major lawsuit!

New York, New York - The US Department of Justice filed an antitrust lawsuit against Visa on Tuesday, alleging the company illegally maintains a monopoly over the use of debit cards in the US.

Visa is being sued for "anti-competitive" business practices by the Justice Department in the latest major antitrust lawsuit.
Visa is being sued for "anti-competitive" business practices by the Justice Department in the latest major antitrust lawsuit.  © REUTERS

According to the lawsuit, filed in a federal court in New York, Visa's practices have resulted in billions of dollars in additional fees for American consumers and businesses while slowing innovation in the debit payments ecosystem.

The lawsuit comes after a wide-ranging three-year probe by the US antitrust enforcers into Visa's business practices.

The case focuses on Visa's debit card business that allows users to only spend money from their checking account, unlike a credit card that enables purchases on borrowed funds that must be repaid later.

"While Visa is the first name many debit card users see when they take out their card to make a purchase, they do not see the role that Visa plays behind the scenes," Attorney General Merrick Garland told reporters.

"There, it controls a complex network of merchants, financial institutions and consumers" and behaves as a "monopolist" that "is charging a hidden toll on trillions of transactions," he alleged.

Lawsuit details Visa's "anti-competitive conduct"

Attorney General Merrick Garland announced the Justice Department's case at a press conference on Tuesday.
Attorney General Merrick Garland announced the Justice Department's case at a press conference on Tuesday.  © KENT NISHIMURA / GETTY IMAGES NORTH AMERICA / GETTY IMAGES VIA AFP

According to the lawsuit, Visa charges roughly $8 billion in network fees on US debit volume annually. Globally, it processes $12.3 trillion in total payment volume.

The US government says that the debit card market involves younger and less wealthy users, a key issue as November's presidential election approaches, with the high cost of living a major concern of voters.

"The burden of Visa's anti-competitive conduct falls disproportionately on Americans who are less well off and who feel the impact of high prices most painfully," said Benjamin C. Mizer, the Principal Deputy Associate Attorney General.

To maintain its dominance, the Justice Department claims Visa imposes exclusionary agreements on merchants and banks, penalizing customers who route transactions through different networks or alternative payment systems.

It also claims that Visa sought to neutralize potential threats from tech companies and fintech startups by entering into partnership agreements rather than allowing them to compete head-on.

Visa is also accused of imposing transaction volume commitments that effectively restrict merchants and banks from using competitors, even when those competitors offer lower prices.

Through these tactics, Visa maintains an "enormous moat" around its business, helping it earn big profits.

Visa responds to stinging accusations

In a statement, Visa's General Counsel Julie Rottenberg called the legal action "meritless."

She refuted the monopoly claims, describing the debit card market as "an ever-expanding universe of companies offering new ways to pay for goods and services."

"When businesses and consumers choose Visa, it is because of our secure and reliable network, world-class fraud protection, and the value we provide," Rottenberg said.

Headquartered in San Francisco, Visa reported a global operating income of $18.8 billion and a healthy operating margin of 64% in 2022. The company's North American operations boasted an 83 percent operating margin in the same year.

Cover photo: Collage: Kent Nishimura / GETTY IMAGES NORTH AMERICA / Getty Images via AFP & REUTERS

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