US accuses Visa of debit card monopoly

Julie Rottenberg, Visa’s general counsel, said businesses and consumers chose Visa because of its “secure and reliable network”.

“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,” she said.

“This lawsuit is meritless, and we will defend ourselves vigorously.”

The filing against Visa is the latest competition lawsuit from the Biden administration, which has taken a more aggressive approach to monopoly concerns, known as antitrust in the US, than previous administrations.

The company’s practices have also faced lawsuits and scrutiny from merchants and competition regulators in other parts of the world including in Europe and Australia.

The Department of Justice started investigating Visa in 2021.

The company processes more than 60% of debit transactions in the US, according to the complaint, bringing in $7bn in fees annually. As of 2022, its debit card business was bigger by revenue than its credit card unit, and highly profitable.

Attorney General Merrick Garland said Visa’s dominance had allowed it to extract fees that were far higher than it could have charged in a “competitive market”.

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

Shares in the firm fell more than 5%.

The lawsuit, filed in federal court in New York, said Visa had used a “web of contracts” that required businesses to commit to routing a certain volume of transactions to the Visa network or face higher fees – effectively creating illegal “exclusive deals”.