US Sues Visa for Monopolizing Debit Card Transactions in Antitrust Case

The U.S. Department of Justice (DOJ) has filed an antitrust lawsuit against Visa Inc. (V.N), accusing the global payment giant of monopolizing the debit card market by suppressing competition through high fees and strategic payoffs to potential rivals. Visa, which handles over 60% of U.S. debit card transactions, generates approximately $7 billion annually from fees charged when transactions are routed through its network, according to the DOJ.

The lawsuit claims Visa maintains its market dominance through agreements with card issuers, merchants, and competitors, ultimately limiting competitive alternatives. The DOJ’s case is part of the broader Biden administration agenda to address inflation, including tackling excessive fees passed on to consumers—a key issue in the upcoming presidential election between Democrat Kamala Harris and Republican Donald Trump.

“Visa’s unlawful conduct impacts not only the cost of individual items but the price of nearly everything,” Attorney General Merrick Garland stated, emphasizing that both merchants and banks transfer the costs of Visa’s payment processing fees to consumers.

History of Alleged Anticompetitive Practices

The DOJ argues that Visa’s alleged anticompetitive behavior began around 2012, following regulatory reforms that required card issuers to enable unaffiliated payment networks. These reforms allowed new competitors to enter the payments space, but Visa allegedly responded by reinforcing its dominance through exclusive deals and restrictive agreements.

The lawsuit, filed in a Manhattan federal court, seeks judicial intervention to restore competition in the debit payment processing market, both for online and in-store transactions.

Previous Legal Battles and Settlements

Visa’s debit card practices have been under DOJ scrutiny since 2021, the same year it blocked Visa’s proposed acquisition of financial technology firm Plaid. Rival Mastercard (MA.N) is also under investigation for similar practices. The two companies have been embroiled in litigation for decades over their control of the payments market.

In 2019, Visa and Mastercard settled a class-action lawsuit with U.S. merchants for $5.6 billion, addressing accusations of anticompetitive conduct. However, a related settlement proposal, aimed at reducing swipe fees by an estimated $30 billion over five years, was rejected by a Brooklyn federal judge in June. Visa has since earmarked $1.6 billion for additional settlements concerning U.S. interchange fee litigation.

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