On Tuesday, the Justice Department filed a lawsuit against Visa, alleging that the payment giant had illegally monopolized the U.S. debit card market. The suit, filed in the Southern District of New York, accuses Visa of suppressing competition and inflating fees that are ultimately passed on to consumers.
The government’s antitrust complaint against Visa alleges that the company has engaged in anti-competitive practices by suppressing alternative card networks and deterring new market entrants. These actions have hindered competition and stifled innovation in the debit payments ecosystem.
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The complaint specifically targets Visa’s control over all debit transactions, including those made with physical cards, online, or through mobile apps. By limiting access to alternative card networks, Visa has reduced competition and hindered the development of new payment technologies.
“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. “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.”
“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 t a press conference. “The harmful effects of Visa’s alleged anticompetitive conduct is less visible, but they are no less harmful.”
One senior Justice Department official even went so far as to say “Visa went to war with the forces of competition and merchants and consumers lost.”
Visa called the suit “meritless” and pledged that it will defend itself “vigorously.”
Julie Rottenberg, Visa’s general counsel, said in a statement that the government’s lawsuit fails to consider 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 added. She added the lawsuit is
