The US Justice Department sued Visa Inc., alleging the global payments giant illegally monopolised the debit card market, in the Biden administration’s first major antitrust case in the financial services industry.
Antitrust enforcers alleged in a complaint filed in Manhattan federal court on Sept 25 that Visa, which handles more than 60 per cent of the more than US$4 trillion in US debit transactions each year, entered into a series of agreements penalising merchants who sought to use alternatives and paid potential rivals to stay out of the market.
“Visa’s unlawful conduct affects not just the price of one thing but the price of everything,” Attorney General Merrick Garland told reporters in Washington in announcing the lawsuit. “Visa is charging a hidden toll on each of trillions of transactions.”
Visa is the largest of the payment networks in the US and collects some US$7 billion in yearly fees on both debit transactions and so-called “card not present” transactions where customers use their debit card number online or in apps, according to the complaint.
In its agreements with merchants, the Justice Department said, Visa imposed an anticompetitive pricing structure that essentially forced them to route all debit transactions through its network or face stiff penalties.
Visa also entered into agreements with technology companies including PayPal Holdings Inc., Apple Inc. and Block Inc., which were developing products that would have challenged its stranglehold over payment networks, paying them hundreds of millions of dollars to stay out of the market, the agency said.
Visa shares closed Sept 25 down 5.5 per cent to US$272.78.
“Anyone who has bought something online, or checked out at a store, knows there is an ever-expanding universe of companies offering new ways to pay for goods and services,” Julie Rottenberg, Visa’s general counsel, said in an emailed