The complaint also accuses Visa of illegally maintaining a monopoly
The Justice Department alleges that more than 60% of debit card transactions in the United States run on Visas debit network, allowing it to charge over $7 billion in fees each year for processing those transactions.
The allegation is the basis of a civil antitrust lawsuitfiledtoday against Visa.
We allege that Visa has unlawfully amassed the power to extract fees that far exceed what it could charge in a competitive market, said Attorney General Merrick B. Garland. Merchants and banks pass along those costs to consumers, either by raising prices or reducing quality or service.
"As a result, Visas unlawful conduct affects not just the price of one thing but the price of nearly everything, Garland said.
The complaint alleges that Visa illegally maintains a monopoly over debit network markets by using its dominance to thwart the growth of its existing competitors and prevent others from developing new and innovative alternatives.
The complaint charges that Visa illegally maintains its monopoly power by insulating itself from competition. For example, Visa wields its dominance andenormous scale to impose a web of exclusionary agreements on merchants and banks.
The suit says those agreements penalize Visas customers who route transactions to a different debit network or alternative payment system. In so doing, the complaint alleges, Visa locks up debit volume, insulates itself from competition, and smothers smaller, lower-priced competitors.
There was no immediate comment from Visa.
An important part of the financial system
Debit transactions are an important and popular part of the U.S. financial system, the suit notes. Millions of Americans prefer or must use debit for online and in-person purchases.
Visa dominates debit network markets that facilitate these transactions, charging significant fees and stifling competition in the process, the Justice Department alleges, saying its systematic efforts to limit competition for debit transactions have resulted in billions of dollars in additional fees imposed on American consumers and businesses and slowed innovation in the debit payments ecosystem.
Visa fears competition and innovation, and instead chooses unlawful cooperation and monopolization, said Principal Deputy Assistant Attorney General Doha Mekki of the Justice Departments Antitrust Division. 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. Todays lawsuit holds Visa accountable for its conduct in a market that forms the backbone of American commerce.
In 2020, the Justice Department filed a civil antitrustlawsuitto stop Visa from acquiring Plaid, a technology company that powers fintech apps developing disruptive options for online debit payments. The companiesabandonedtheir planned $5.3 billion merger.
Visa has a global operating income of $18.8 billion and an operating margin of 64% in 2022. North America is among Visas most profitable regions with 2022 operating margins of 83%.
Photo Credit: Consumer Affairs News Department Images
Posted: 2024-09-24 20:30:35
