US Justice Department Sues Visa Over Debit Card Market Monopoly

The Justice Department filed a request on Tuesday. Lawsuit against VisaAlleging that the company maintained an illegal monopoly in the U.S. debit card market.

According to the Justice Department complaint, more than 60% of Debit Card Transactions Banks in the United States rely on Visa’s direct debit network, which allows the company to collect more than $7 billion in fees annually to process these transactions.

Visa is also accused of illegally maintaining its monopoly power by insulating itself from competition. For example, the Justice Department said Visa uses exclusionary agreements on merchants and banks that use its debit card services, allowing it to restrict debit card transaction volumes while “insulating itself from competition, stifling smaller, cheaper competitors.”

“We allege that Visa has unlawfully accumulated the power to charge fees far in excess of what it could charge in a competitive market,” Attorney General Merrick Garland said in a statement. “Merchants and banks pass these costs on to consumers, either by raising prices or reducing quality or service. As a result, Visa’s illegal conduct doesn’t just affect the price of one thing — it affects the price of virtually everything.”

Credit card delinquency rates hit worst since 2012, new Fed study finds

The DOJ lawsuit also said Visa “incentivizes potential competitors to become partners rather than enter the market as competitors by offering generous financial incentives and threatening them with punitive additional fees.”

Visa is accused of engaging in a “deliberate and reinforcing course of conduct.” Cut the competition The Justice Department also noted that Visa uses its size to take advantage of merchants and consumers to build what it called a “huge moat” around its business.

Visa has denied the allegations, with Julie Rotenberg, Visa’s general counsel, saying in a statement to Fox Business: “Anyone who has ever bought something online, or paid in a store, knows that there is an ever-expanding universe of companies offering new ways to pay for goods and services.”

“Today’s lawsuit ignores the fact that Visa is just one of many competitors in a rapidly growing payment card space, with new players thriving. When businesses and consumers choose Visa, it is because of our secure and reliable network, world-class fraud protection, and the value we provide,” Rotenberg added. “We are proud of the payments network we have built, the innovation we drive, and the economic opportunity we create. This lawsuit is without merit, and we will defend ourselves vigorously.”

Attorney General Merrick Garland said Visa used its influence in the debit card market to extract excessive fees from merchants while blocking out competition. (Photo by Chip Somodevilla/Getty Images) / Getty Images

Judge: Visa, Mastercard may reach settlement over card swipe fees worth more than $30 billion

Visa and rival Mastercard have faced legal scrutiny in recent months. Last summer, a federal judge ruled that Visa could no longer use credit cards. $30 billion settlement rejected In a lawsuit over swipe fees, also known as interchange fees, that card issuers charge merchants to process their transactions.

The settlement would have reduced and capped swipe fees, saving merchants an estimated $6 billion annually.

A $30 billion settlement between Visa and Mastercard in a case over excessive swipe fees to merchants was recently rejected, with a judge saying they could likely afford a larger verdict. (Photographer: Angus Mordaunt/Bloomberg via Getty Images/Getty Images)

Get FOX BUSINESS on the go by clicking here.

The judge said the amount was “paltry” compared to the roughly $100 billion in fees the companies paid to Visa and Mastercard in 2023, and said the “evidence strongly suggests” that Visa and Mastercard “can afford a much larger judgment.”

Visa shares fell more than 4.3% on Tuesday amid reports that the Justice Department is preparing to file its lawsuit against the financial services giant.