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U.S. NEWS Wednesday 25 september 2024
Department of Justice sues Visa, alleges the card issuer

monopolizes debit card markets

By MAE ANDERSON DOJ described as “disloy-
AP Business Writer alty penalties” from Visa.
NEW YORK (AP) — The U.S. The DOJ said Visa also sti-
Justice Department has fled competition by paying
filed an antitrust lawsuit to enter into partnership
against Visa, alleging that agreements with poten-
the financial services be- tial competitors. In 2020,
hemoth uses its size and the DOJ sued to block the
dominance to stifle com- company’s $5.3 billion pur-
petition in the debit card chase of financial technol-
market, costing consumers ogy startup Plaid, calling it
and businesses billions of a monopolistic takeover of
dollars. The complaint filed a potential competitor to
Tuesday says San Francis- Visa’s ubiquitous payments
co-based Visa penalizes network. That acquisition
merchants and banks who was eventually later called
don’t use Visa’s own pay- off. Visa previously dis-
ment processing technol- closed the Justice Depart-
ogy to process debit trans- ment was investigating the
actions, even though alter- company in 2021, saying
natives exist. Visa earns an in a regulatory filing it was
incremental fee from every cooperating with a DOJ
transaction processed on A Visa card is displayed on May 15, 2024, in Portland, Ore. investigation into its debit
its network. Associated Press practices.q
According to the DOJ’s
complaint, 60% of debit such as Ticketmaster par-
transactions in the United ent Live Nation and the real
States run on Visa’s deb- estate software company
it network, allowing it to RealPage, accusing them
charge over $7 billion in of burdening Americans
fees each year for process- with nonsensical fees and
ing those transactions. anticompetitive behavior.
“We allege that Visa has The administration has also
unlawfully amassed the brought charges of mo-
power to extract fees that nopolistic behavior against
far exceed what it could technology giants such as
charge in a competitive Apple and Google.
market,” said Attorney “In some of the Justice
General Merrick B. Garland Department’s antitrust en-
in a statement. “Merchants forcement actions, the
and banks pass along harm caused by the al-
those costs to consumers, leged illegal conduct is
either by raising prices or more visible: higher prices
reducing quality or service. for air travel, for concert
As a result, Visa’s unlawful tickets, for smartphones,”
conduct affects not just Garland said during a news
the price of one thing but conference in Washington
the price of nearly every- on Tuesday. “The harmful
thing.” effects of Visa’s alleged
In a statement, Julie Rotten- anticompetitive conduct is
berg, Visa’s general coun- less visible, but they are no
sel, said the lawsuit doesn’t less harmful.”
take into account the According to the DOJ
“ever expanding universe complaint, filed in the U.S.
of companies offering new District Court for the South-
ways to pay for goods and ern District of New York,
services.”“Today’s lawsuit Visa leverages the vast
ignores the reality that Visa number of transactions on
is just one of many compet- its network to impose vol-
itors in a debit space that is ume commitments on mer-
growing, with entrants who chants and their banks, as
are thriving,” Rottenberg well as on financial institu-
said. She added the law- tions that issue debit cards.
suit is “meritless” and the That makes it difficult for
company will defend itself merchants to use alterna-
“vigorously.” tives, such as lower-cost or
The Biden administration smaller payment proces-
has aggressively gone af- sors, instead of Visa’s pay-
ter U.S. companies that it ment processing technol-
says act like middlemen, ogy, without incurring what