Department of Justice sues Visa for alleged debit payment monopoly
The U.S. Department of Justice has filed suit against Visa for what the government says are illegal efforts to dominate debit payments.
In a civil antitrust lawsuit filed by the Department of Justice in the U.S. District Court for the Southern District of New York, the Department of Justice claims that Visa has been unfairly using its size and payment volume to force partner retailers and banks to pay excessive fees, which are then primarily passed on to consumers.
"We allege that Visa has unlawfully amassed the power to extract fees that far exceed what it could charge in a competitive market," U.S. Attorney General Merrick Garland said in an official statement. "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, these fees have added up over the years to total $7 billion in costs for Visa’s debit partners and their customers. The Department of Justice said Visa’s network handles more than 60% of U.S. debit payments, with "exclusionary agreements" resulting in extra charges for customers who use non-Visa debit networks or systems.
The suit also alleges Visa intentionally tries to purchase or partner with financial services start-ups to prevent potential competition in the debit payment space. Visa has not yet formally responded to the government suit.
In an official statement, Merchants Payment Coalition executive committee member and National Association of Convenience Stores general counsel Doug Kantor said this suit is evidence that Visa has been blocking competition in the debit card market.
"Visa has relentlessly flouted the law to maintain a monopoly over setting fees for transactions made with cards issued under its brand and for processing those transactions," Kantor said in the statement. "While this case is focused on debit cards, it shows how we desperately need competition over credit card swipe fees, which currently face no competition at all."
In June 2024, a U.S. judge overseeing an unrelated $30 billion preliminary swipe-fees settlement between Mastercard, Visa and leading retailers formally rejected the settlement.
