Justice Department sues Visa for monopolizing debit market

The Justice Department filed a civil lawsuit against Visa Inc. on Tuesday, accusing the company of monopolizing the debit card market and blocking competition.

According to documents filed in Manhattan federal court, the government claims Visa has implemented anti-competitive measures to hinder the expansion of competitors and limit the entry of new technology companies into the market.

Allegations of anti-competitive practices

Among the main allegations, the Justice Department notes that Visa imposed a "web of exclusionary agreements" on merchants and banks, penalizing customers whose transactions are processed through competing networks. This strategy, according to the government, is designed to block rivals and consolidate Visa's dominance in the debit card market.

The impact on consumers

Attorney General Merrick Garland explained that Visa has used its market power to impose higher fees than would be possible in a competitive environment, generating more than $7 billion annually in processing fees. Garland noted that this practice not only raises prices for debit card transactions, but affects the cost of a wide range of goods and services, passing the impact on to consumers.

Context and background

This is not Visa's first legal clash with antitrust authorities. In 2020, the Department of Justice blocked the $5.3 billion acquisition of technology company Plaid, citing similar concerns about monopoly. Later on Visa decided to abandon the merger. In addition, its competitor Mastercard has also been the subject of investigations. In 2022, Mastercard reached a settlement with the Federal Trade Commission to resolve allegations related to its own anti-competitive practices in the debit card market.

Market Impact

The lawsuit had an immediate effect on the market, with Visa shares falling 1.95% following the announcement. This reaction reflects investor concern about the legal consequences and possible implications for the company's future.

So far, neither Visa nor the Department of Justice has issued official statements on the case.