Department of Justice sues Visa, alleges the card issuer monopolizes debit card markets

The U.S. Justice Department has filed an antitrust lawsuit against Visa, alleging that the financial services behemoth uses its size and dominance to stifle competition in the debit card market NEW YORK — The U.S. Justice Department has filed an antitrust lawsuit against Visa, alleging that the financial services behemoth uses its size and dominance to stifle competition in the debit card market, costing consumers and businesses billions of dollars. The complaint filed Tuesday says San Francisco-based Visa penalizes merchants and banks who don’t use Visa’s own payment processing technology to process debit transactions, even though alternatives exist. According to the DOJ’s complaint, 60% of debit transactions in the United States run on Visa’s debit network, allowing it to charge over $7 billion in fees each year for processing those transactions. “We allege that Visa has unlawfully amassed the power to extract fees that far exceed what it could charge in a competitive market,” said Attorney General Merrick B. Garland in a statement. As a result, Visa’s unlawful conduct affects not just the price of one thing – but the price of nearly everything.” In a statement, Julie Rottenberg, Visa’s general counsel, said the lawsuit doesn’t take into account the “ever expanding universe of companies offering new ways to pay for goods and services.” “Today’s lawsuit ignores the reality that Visa is just one of many competitors in a debit space that is growing, with entrants who are thriving,” Rottenberg said. She added the lawsuit is “meritless” and the company will defend itself “vigorously.” The Biden administration has aggressively gone after U.S. companies that it says act like middlemen, such as Ticketmaster parent Live Nation and the real estate software company RealPage, accusing them of burdening Americans with nonsensical fees and anticompetitive behavior. “In some of the Justice Department’s antitrust enforcement actions, the harm caused by the alleged illegal conduct is more visible: higher prices for air travel, for concert tickets, for smartphones,” Garland said during a news conference in Washington on Tuesday. “The harmful effects of Visa’s alleged anticompetitive conduct is less visible, but they are no less harmful.” According to the DOJ complaint, filed in the U.S. District Court for the Southern District of New York, Visa leverages the vast number of transactions on its network to impose volume commitments on merchants and their banks, as well as on financial institutions that issue debit cards. That makes it difficult for merchants to use alternatives, such as lower-cost or smaller payment processors, instead of Visa’s payment processing technology, without incurring what DOJ described as “disloyalty penalties” from Visa. In 2020, the DOJ sued to block the company’s $5.3 billion purchase of financial technology startup Plaid, calling it a monopolistic takeover of a potential competitor to Visa’s ubiquitous payments network. Visa previously disclosed the Justice Department was investigating the company in 2021, saying in a regulatory filing it was cooperating with a DOJ investigation into its debit practices. consumer payments business is the slowest growing piece of the aggregate business, and to the extent its contribution is affected, it is likely to have a very limited impact on revenue growth.” He added the lawsuit could stretch out for years if it isn’t settled and goes to trial. Visa processed $3.325 trillion in transactions on its network during the quarter ended June 30, up 7.4% from a year earlier. – This Summarize was created by Neural News AI (V1). Source: https://abcnews.go.com/Business/wireStory/department-justice-sues-visa-card-issuer-monopolizes-debit-113995500