NEW YORK (AP) — The U.S. Justice Department has filed an antitrust complaint against Visa, alleging that the financial services giant uses its size and dominance to stifle competition in the debit card market, costing consumers and businesses billions of dollars.
The complaint filed Tuesday claims that Visa penalizes merchants and banks that don’t use its own payment processing technology to handle debit transactions, even though alternatives exist. Visa collects additional fees on each transaction processed on its network.
According to the Justice Department’s complaint, 60% of debit transactions in the United States occur on Visa’s debit network, allowing it to charge more than $7 billion in fees each year for processing those transactions.
“We allege that Visa has unlawfully amassed the power to charge fees that far exceed what it could charge in a competitive market,” Attorney General Merrick B. Garland said in a statement. “Merchants and banks pass these costs on to consumers, either by raising prices or reducing quality or service. As a result, Visa’s unlawful conduct affects not just the price of one thing, but the price of almost everything.”
The Biden administration has aggressively targeted American companies that it says act as middlemen, such as Live Nation, parent company of Ticketmaster and the real estate software company Actual pageaccusing them of charging Americans insane fees and engaging in anticompetitive behavior. The administration has also leveled accusations of monopolistic behavior against tech giants like Apple and Google.
According to the DOJ complaint filed in the U.S. District Court for the Southern District of New York, Visa exploits the large number of transactions on its network to impose volume commitments on merchants and their banks, as well as on financial institutions that issue debit cards. This makes it difficult for merchants to use alternatives, such as lower-cost or smaller payment processors, instead of Visa’s payment processing technology without incurring what the DOJ described as “disloyalty penalties” from Visa.
The Justice Department said Visa also stifled competition by paying to enter into partnership agreements with potential rivals.
Since the pandemic, more consumers around the world have been buying goods and services online, which has translated into increased fee revenue for Visa. Even traditionally cash-intensive businesses like bars, hairdressers and coffee shops have started accepting credit or debit cards as payment, often via their smartphone.
Visa, based in San Francisco, did not immediately comment.
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