Visa monopolizes debit card networks, DOJ lawsuit claims

Visa lawsuit overview:

• Who: The U.S. Department of Justice filed an antitrust lawsuit against Visa Inc.
• Why: Visa allegedly engaged in an anticompetitive scheme to establish a monopoly on debit card networks.
• Where: The Visa lawsuit was filed in New York federal court.

The U.S. Department of Justice filed a Visa lawsuit alleging the credit card company uses its market dominance to maintain an unlawful monopoly on debit card networks.

The Visa debit card lawsuit claims the credit card giant violates antitrust law by partnering with potential competitors and penalizing banks and merchants that utilize alternative payment systems.

As a result of this alleged antitrust scheme, Visa has been able to control more than 60% of debit card transactions in the country and charge more than $7 billion in processing fees, according to the DOJ.

“Merchants and banks pass along these costs to consumers, either by raising prices or reducing quality or service,” Attorney General Merrick B. Garland said during a press conference. “As a result, Visa’s unlawful conduct affects not just the price of one thing – but the price of nearly everything.”

Visa lawsuit alleges steep fines, anticompetitive agreements harm consumers

The Visa lawsuit says the credit card company offers discounts to merchants, banks and debit card issuers that agree to route most debit card transactions through Visa’s networks. Without these agreements, Visa allegedly charges such high fees, called “rack rates,” that effectively exclude competition from other networks.

“Visa threatens punitive rack rates if merchants (or their acquirers) route a meaningful share of their transactions to Visa’s competitors,” the Visa lawsuit states.

The DOJ also alleges Visa pays hundreds of millions of dollars each year to technology companies who agree not to create competing products.

“Rather than engage in fulsome competition, Visa’s agreement with these companies, including Apple, PayPal and Square, have succeeded in transforming these potential competitors into partners to the detriment of competition from those would-be rivals and Visa’s own incentives to innovate, and at the expense of American consumers and American merchants of all sizes,” the Visa lawsuit alleges.

Visa and Mastercard recently agreed to pay $197.5 million to settle an ATM fees class action lawsuit.

What do you think about the alleged Visa debit card network monopoly? Tell us your thoughts in the comments.

The United States is represented by Doha Mekki, Hetal J. Doshi, Michael Kades, Ryan Danks, Catherine K. Dick, Miriam R. Vishio, Owen M. Kendler, Edward Duffy, Lillian Okamuro Haffner, Campbell Haynes, Christine A. Hill, Kevin Krautscheid, Gregg Malawer, Bennett J. Matelson, Lauren G.S. Riker, Michele Trichler, Robert Vance and Rachel L. Zwolinski of the DOJ Antitrust Division.

The Visa debit card lawsuit is United States of America v. Visa Inc., Case No. 1:24-cv-07214, in the U.S. District Court for the Southern District of New York.

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