U.S. authorities are suing Visa for creating a debit card monopoly through “unlawful conduct”.
The U.S. Department of Justice (DoJ) filed a lawsuit against the company on Wednesday.
Visa is accused of an “abuse of power” to suppress competition in the U.S. debit card market, “at the expense” of consumers and businesses.
Lawyers defending the financial giant told the BBC the lawsuit is “meritless”.
Visa
Visa Incorporated is an American credit and debit card company that operates around the world.
Debit cards allow people to transfer money straight from their bank accounts to a business’ bank account.
Visa owns and controls the largest network system that manages those transactions. It runs more than 60% of U.S. debit transactions.
Lawsuit
Visa is being sued over allegations it breached competition laws to create a ‘monopoly’ — when a company obtains market dominance through measures that shut down competition.
Prosecutors accused Visa of unlawfully penalising merchants and banks who don’t use its payment processes or switch providers.
The DoJ said Visa deliberately stifled competition because it “feared a future [with] newer, better, or cheaper alternatives”.
Fees
Visa is accused of illegally maintaining its power by “insulating itself from competition” through “a web of exclusionary agreements” in its contracts with businesses and banks.
The DoJ claims this gave the company “unlawfully amassed” power, which it has used to charge fees that exceed what would be fair in a healthy competitive market.
The DoJ also claims Visa’s “systematic efforts to limit competition” left consumers and the economy worse off.
Doha Mekki, a DoJ attorney, said “Visa abuses its power over its customers and buys off would-be rivals at the expense of American consumers, merchants, banks, and the competitive process itself.”
Lawyers representing Visa told the BBC that the company will “vigorously” defend itself in court.
Previous lawsuit
In 2020, the DoJ filed a similar lawsuit against Visa to try and stop it from acquiring Plaid, a smaller financial services company.
The DoJ accused Visa of attempting to further its monopoly by buying smaller competitors.
The merger was abandoned.
