Visa is in the antitrust crosshairs.
The US Department of Justice filed a lawsuit on Tuesday arguing that the payment processing giant illegally maintained a monopoly with anti-competitive behavior and imposed unfair costs on customers and merchants.
“We allege that Visa has unlawfully amassed the power to extract fees that far exceed what it could charge in a competitive market,” Attorney General Merrick Garland said in a 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.”
Visa did not immediately respond to Business Insider’s request for comment on the lawsuit.
In the complaint, filed in the Southern District of New York, prosecutors say Visa handles more than 60% of US debit transactions, earning the company more than $7 billion in fees per year.
Visa’s use of “generous monetary incentives and threatening punitive additional fees” enable the company to maintain an illegal monopoly in the debit card processing market, prosecutors say.
The suit follows a years-long investigation that followed Visa’s attempted $5.3 billion acquisition of fintech company Plaid, which the Department of Justice sued to block in 2020. The two companies abandoned the deal the following year.
Visa acknowledged that the Department of Justice was planning to investigate its US debit card business in a 2021 filing with the SEC.
A key issue under scrutiny is the use of security tokens, which can be used to block the routing of payments to other networks. Rival MasterCard settled a similar matter with the Federal Trade Commission in 2022.
While the scrutiny of Visa pre-dates the Biden Administration, this latest action is one of several crackdowns on middlemen companies that the White House argues are raising costs for American consumers.
“Anticompetitive conduct by corporations like Visa leaves the American people and our entire economy worse off,” Principal Deputy Associate Attorney General Benjamin Mizer said in a statement. “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.”
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