Justice Department accuses Visa of monopolizing debit market in antitrust lawsuit

The Justice Department sued Visa on Tuesday, accusing the credit card company of illegally maintaining a monopoly over the debit market. 

The DOJ argues that Visa has limited competition by entering into exclusive agreements with merchants and banks that force most or all of their transactions to run on Visa’s network. 

It also allegedly paid-off or threatened potential rivals with additional fees in order to avoid competition, particularly from tech and fintech companies, according to an agency press release. 

“We allege that Visa has unlawfully amassed the power to extract fees that far exceed what it could charge in a competitive market,” Attorney General Merrick Garland said in a statement.  

“Merchants and banks pass along those costs to consumers, either by raising prices or reducing quality or service,” he continued. “As a result, Visa’s unlawful conduct affects not just the price of one thing – but the price of nearly everything.” 

Visa controls more than 60 percent of the $4 trillion debit card transactions that take place in the U.S. each year and charges more than $7 billion in fees on these transactions, according to the DOJ.

The DOJ’s lawsuit alleges that Visa began taking steps to build out an “enormous moat” in the wake of the 2008 recession, as new legislation and tech companies threatened its monopoly.

Visa entered into routing agreements with merchants and banks that offered discounts on Visa transactions but also levied significant penalties unless most or all their debit volume ran through Visa, according to the lawsuit.

The company also secured commitments from tech firms and startups, such as Apple, PayPal and Stripe, that they would not develop competing products.

“The harmful effects of Visa’s alleged anti-competitive conduct are less visible, but they are no less harmful,” Garland said at a press conference Tuesday, comparing the DOJ’s other antitrust actions this year.

“While Visa is the first name many debit card users see when they take out their card to make a purchase, they do not see the role that Visa plays behind the scenes,” the attorney general added.

National Economic Council Deputy Director Jon Donenberg said in a statement that the Biden administration “has been clear that the American economy thrives when there is real competition.”

He pointed to the administration’s previous work taking on so-called “junk fees,” including credit card late fees and banking overdraft fees.

Julie Rottenberg, Visa’s general counsel, said in a statement that the DOJ’s lawsuit is “meritless” and vowed to “defend ourselves vigorously.”

“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,” Rottenberg said. “Today’s lawsuit ignores the reality that Visa is just one of many competitors in a debit space that is growing, with entrants who are thriving.”

Updated at 4:42 p.m. ET.