The Department of Justice has sued Visa, one of the world's largest payment networks, for antitrust violations that affect “the price of almost everything.”
According to the complaint filed in the U.S. District Court for the Southern District of New York, the financial giant stifled competition by intimidating merchants with excessive fees and bribing potential rivals.
The lawsuit alleges that Visa makes it difficult for retailers to use alternatives, such as lower-cost or smaller payment processors, in place of its own payment processing technology without suffering what prosecutors call a “bad faith penalty.”
In the most recent quarter, Visa processed approximately $3.3 trillion in transactions across its vast financial network.
According to the Justice Department, the company processes more than 60% of debit transactions in the United States and earns $7 billion each year from fees it collects when transactions pass through its network. Prosecutors allege that the company protects its dominance through contracts with card issuers, retailers and competitors.
The effort to tackle these fees, also known as swipe or interchange fees, is part of the Biden administration's efforts to combat rising consumer prices, a key issue of his presidential campaign.
“We allege that Visa has illegally amassed the power to collect fees far in excess of what it could charge in a competitive market,” Attorney General Merrick Garland said in a statement. “Retailers and banks then pass these costs on to consumers, either by raising prices or reducing quality and service.”
“As a result, Visa's misconduct affects not just the price of one thing, but the price of nearly everything.”
The San Francisco-based company, valued at more than $500 billion on the stock market, did not immediately respond to a request for comment on Tuesday. Its shares fell nearly 5 percent on news of the lawsuit.
A senior Justice Department official said the allegations of anticompetitive behavior by Visa began around 2012, when competitors entered the payments field following reforms that required card issuers to support unaffiliated networks.
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The lawsuit asks a Manhattan judge to impose requirements that would restore competition for services that process debit payments both online and in brick-and-mortar stores.
The Justice Department's antitrust division launched an investigation into Visa's debit card practices in 2021, the same year it blocked the credit card company's acquisition of financial technology company Plaid. Rival Mastercard also announced in April that it was under Justice Department investigation.
The two companies have been locked in a legal battle for nearly 20 years over dominance in the card market. In 2019, the company agreed to pay $5.6 billion to U.S. retailers to settle class action claims it had made against them for anti-competitive behavior.
Reuters and The Associated Press contributed reporting
