NEW YORK -- The U.S.Justice Department has filed an antitrust lawsuit against Visa, alleging that the financial services behemoth uses its size and dominance to stifle competition in the debit card market, costing consumers and businesses billions of dollars.The complaint filed Tuesday says Visa penalizes merchants and banks who don't use Visa's own payment processing technology to process debit transactions, even though alternatives exist.
Visa earns an incremental fee from every transaction processed on its network.According to the DOJ's complaint, 60% of debit transactions in the United States run on Visa’s debit network, allowing it to charge over $7 billion in fees each year for processing those transactions.“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.”The Biden administration has aggressively gone after U.S.
companies that it says act like middlemen, such as Ticketmaster parent Live Nation and the real estate software company RealPage, accusing them of burdening Americans with nonsensical fees and anticompetitive behavior.The administration has also brought charges of monopolistic behavior against technology giants such as Apple and Google.
According to the DOJ complaint, filed in the U.S.District Court for the Southern District of New York, Visa leverages the vast number of transactions on its network to impose volume commitments on merchants and their banks, as well as on financial institutions that issue debit cards.
That makes it difficult for merchants to use alternatives, such as lower-cost or smaller payment processors, instead of Visa’s payment processing technology...