DOJ Accuses Visa of Debit Card Monopoly in New Antitrust Lawsuit

The U.S. Department of Justice (DOJ) has launched a legal battle against Visa, alleging that the financial giant has maintained a monopoly in the debit card market, resulting in billions of dollars in excessive fees for both consumers and businesses.

In the lawsuit filed on Tuesday, the DOJ claims Visa has suppressed competition, charging fees significantly higher than would be expected in a more competitive environment. The company processes over 60% of debit transactions in the U.S., reportedly collecting more than $7 billion in fees annually.

While these fees are primarily paid by merchants, the DOJ argues that the costs are indirectly passed on to consumers, either through inflated prices or diminished service quality.

“Visa’s actions don’t just affect one product—they influence the cost of nearly everything," said U.S. Attorney General Merrick Garland in a statement accompanying the lawsuit.

In response, Visa contends that the lawsuit lacks merit, insisting that it is just one of many competitors in a robust and growing debit card market.

“When businesses and consumers choose Visa, it’s because of the reliability of our secure network and our world-class fraud protection,” said Visa’s General Counsel, Julie Rottenberg, defending the company's role in the payments ecosystem.

This latest DOJ lawsuit follows a series of antitrust actions taken by the Biden Administration against large corporations accused of monopolistic practices. Earlier this year, lawsuits were filed against Ticketmaster and Apple, and the DOJ secured a victory against Google in an antitrust case last month.

The lawsuit accuses Visa of using exclusionary tactics to hinder potential competitors. The DOJ claims Visa has entered agreements with banks and merchants that discourage or penalize them for using alternative payment processors. Additionally, it highlights a 2020 case in which the DOJ blocked Visa's attempt to acquire fintech firm Plaid, citing concerns over Visa's potential to maintain its market dominance and high fees.

While Mastercard, another major debit card provider, has also faced regulatory scrutiny, Visa's dominant market position continues to be a focal point for the DOJ's investigation.

Impact on Consumers The DOJ argues that Visa's monopoly has stifled innovation in the payments industry and led to inflated fees for consumers. While it may not result in immediate changes at the checkout counter, increased competition in the debit card market could potentially reduce costs over time, according to legal experts.

Douglas Ross, a law professor at the University of Washington, noted that while the overall savings might be significant for the economy, individual consumers may not notice the difference right away. “A penny saved on each transaction adds up across millions of payments,” he explained.

The eventual outcome of the case will depend on how effectively Visa defends its practices. Rebecca Haw Allensworth, a law professor at Vanderbilt University, noted that Visa is likely to argue that its practices benefit both merchants and consumers by providing security and reliability in the payments ecosystem.