Photo: Reuters
Published: Tue 24 Sep 2024, 11:33 PM
The US Department of Justice filed an antitrust lawsuit against Visa on Tuesday, alleging the company illegally maintains a monopoly over debit card networks in the United States.
According to the lawsuit, filed in a federal court in New York, Visa’s practices have resulted in billions of dollars in additional fees for American consumers and businesses while slowing innovation in the debit payments ecosystem.
The lawsuit comes after years of probes by the US antitrust enforcers into Visa’s business practices.
“We allege that Visa has unlawfully amassed the power to extract fees that far exceed what it could charge in a competitive market,” Attorney General Merrick Garland said in a statement.
Visa, according to the lawsuit, charges roughly $8 billion in network fees on US debit volume annually. Globally, Visa processes $12.3 trillion in total payment volume.
The Justice Department claims Visa imposes exclusionary agreements on merchants and banks, penalising customers who route transactions through different networks or alternative payment systems.
It also claims that Visa sought to neutralise potential threats from technology companies and fintech startups by entering into partnership agreements rather than allowing them to compete directly.
Visa also imposes transaction volume commitments that effectively penalise merchants and banks for using competitors, the Justice Department alleges, even when those competitors offer lower prices.
Through these tactics, Visa maintains an “enormous moat” around its business, helping it earn big profits.
Headquartered in San Francisco, Visa reported a global operating income of $18.8 billion and an operating margin of 64 percent in 2022.
The company’s North American operations boasted an 83 percent operating margin in the same year.
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