U.S. sues Visa for monopolizing debit card market

The US Justice Department filed a lawsuit against Visa, accusing the company of illegally monopolizing the debit card market. The lawsuit alleges that for over a decade, Visa has abused its dominant position to force businesses to use its network and prevent new competitors from entering the market.

Attorney General Merrick Garland stated that Visa's alleged unlawful conduct has allowed the company to extract excessive fees, which are ultimately passed on to consumers through higher prices or reduced quality of service. The Justice Department claims that Visa controls more than 60% of debit transactions in the country, generating over $7 billion in processing fees.

The lawsuit alleges that Visa maintains its market dominance through exclusivity agreements that penalize vendors and banks for using alternative systems. Additionally, the company is accused of co-opting potential competitors by offering monetary incentives or threatening punitive fees.

Visa has denied the allegations, stating that the lawsuit is meritless and ignores the reality of growing competition in the debit space, particularly online. The company plans to defend itself in court.

This antitrust suit is part of a series of recent major actions taken by the Justice Department, including cases against a real estate company, Ticketmaster's parent company Live Nation, and Google. It comes three years after the department successfully blocked Visa's merger with financial technology startup Plaid.

The lawsuit reflects ongoing concerns from merchants and retailers about credit card companies charging exorbitant fees. A recent $30 billion settlement between merchants Visa and Mastercard was rejected by a federal judge in June, with the court arguing that the credit card companies needed to make more concessions.