Current:Home > NewsDOJ's Visa antitrust lawsuit alleges debit card company monopoly -MarketLink
DOJ's Visa antitrust lawsuit alleges debit card company monopoly
View
Date:2025-04-15 00:59:49
The Justice Department has filed an antitrust lawsuit against Visa, accusing the company of running a debit card monopoly that imposed “billions of dollars” worth of additional fees on American consumers and businesses.
The lawsuit, filed Tuesday, accuses Visa of stifling competition and tacking on fees that exceed what it could charge in a competitive market. More than 60% of U.S. debit transactions are processed on Visa’s debit network, allowing the company to charge over $7 billion in fees each year, according to the complaint.
While Visa's fees are paid by merchants, the Justice Department said costs are passed along to consumers through higher prices or reduced quality.
“As a result, Visa’s unlawful conduct affects not just the price of one thing – but the price of nearly everything.” Attorney General Merrick Garland said in a news release.
Two roommates. A communal bathroom.Why are college dorm costs so high?
Earn rewards on your spending: See the best credit cards
Visa argues that it is “just one of many competitors” in a growing debit space and called the lawsuit “meritless.”
“When businesses and consumers choose Visa, it is because of our secure and reliable network, world-class fraud protection, and the value we provide,” reads a statement from Julie Rottenberg, Visa’s General Counsel. “We are proud of the payments network we have built, the innovation we advance, and the economic opportunity we enable.”
What the Justice Department is alleging
The litigation is the latest in a string of lawsuits targeting monopolistic behavior filed during the Biden Administration. The Justice Department filed antitrust lawsuits against Ticketmaster and Apple earlier this year, and Google lost an antitrust lawsuit to the department last month.
In its lawsuit against Visa, the Justice Department claims Visa has run a monopoly by incentivizing would-be competitors to become partners instead, offering “generous” amounts of money and threatening punitive fees.
The department also accuses the company of entering exclusionary agreements with merchants and banks that penalize customers who try to route transactions through a different company’s system.
The complaint follows a Justice Department lawsuit in 2020 that blocked Visa’s plans to acquire financial technology company Plaid. The department at the time said the deal would allow Visa to “maintain its monopoly position and supracompetitive prices for online debit.”
Mastercard, another major player in the debit card space, has also been scrutinized by regulators. The company last year settled a complaint from the Federal Trade Commission accusing it of stifling competing payment networks.
What does this mean for consumers?
The Justice Department claims Visa’s operations have slowed innovation in the debit payments ecosystem and led to "significant additional fees" imposed on Americans.
“Anticompetitive conduct by corporations like Visa leaves the American people and our entire economy worse off,” said Principal Deputy Associate Attorney General Benjamin Mizer in the department’s statement.
But Americans shouldn't expect to notice any drastic changes at checkout from this lawsuit.
If the Justice Department settles or wins this case, that could open the door to more competition in the debit card market and help ease prices, according to Douglas Ross, a professor at the University of Washington School of Law. But the cost savings may be too small for consumers to take notice.
"You'll see substantial cumulative savings throughout the economy if we get more competition here. But that’s not going to be something consumers directly notice," he said. "That doesn’t mean there’s not consumer harm – a penny here and a penny there over millions of transactions adds up to a whole lot of money."
The outcome will also depend on Visa's defense, according to Rebecca Haw Allensworth, a law professor at Vanderbilt Law School in Nashville, Tennessee.
"I think knowing really how winning a suit like this will affect consumers (and merchants) depends on what Visa has to say about why it does what it does," she said in an email. "They will probably argue that their dealings with merchants and rivals are good for card-holders, and the case will largely turn on how strong those arguments are."
veryGood! (1)
Related
- McKinsey to pay $650 million after advising opioid maker on how to 'turbocharge' sales
- Big Ten clash between Ohio State and Oregon leads college football Week 7 predictions for Top 25 games
- Tropicana Field shredded by Hurricane Milton is the latest sports venue damaged by weather
- Opinion: The quarterback transfer reality: You must win now in big-money college football world
- North Carolina trustees approve Bill Belichick’s deal ahead of introductory news conference
- This Historic Ship Runs on Coal. Can It Find a New Way Forward?
- Hawaii’s prison system confronts ‘a huge mental health crisis’
- Jeremy Strong and Sebastian Stan on ‘The Apprentice': ‘We’re way out on a limb’
- Buckingham Palace staff under investigation for 'bar brawl'
- Prime Day 2024 Final Hours: Score a Rare 40% Off Waterpik Water Flosser Deal
Ranking
- The White House is cracking down on overdraft fees
- McDonald's Chicken Big Mac debuts this week: Here's what's on it and when you can get one
- House Democrats in close races try to show they hear voter concerns about immigration
- Justin Timberlake cancels show in New Jersey after suffering unknown injury
- Jamie Foxx gets stitches after a glass is thrown at him during dinner in Beverly Hills
- Taylor Swift makes multi-million dollar donation to Hurricane Milton, Helene relief
- Sum 41's Deryck Whibley alleges sex abuse by ex-manager: Biggest revelations from memoir
- Hurricane Milton hitting near the sixth anniversary of Hurricane Michael
Recommendation
Paige Bueckers vs. Hannah Hidalgo highlights women's basketball games to watch
Pitching chaos? No, Detroit Tigers delivering playoff chaos in ALDS
WNBA Finals: USA TODAY staff predictions for Liberty vs. Lynx
Kate Middleton Makes First Public Engagement With Prince William Since Finishing Chemotherapy
Whoopi Goldberg is delightfully vile as Miss Hannigan in ‘Annie’ stage return
Climate solution: Form Energy secures $405M to speed development of long-awaited 100-hour battery
'Do not do this': Dog tied to fence as Hurricane Milton advances highlights pet danger
Prince William Shares Royally Relatable Parenting Confession About His and Kate Middleton's Kids