US DOJ Accuses Visa of Debit Card Market Monopoly

The United States (US) Department of Justice (DOJ) has filed an antitrust lawsuit against Visa, accusing the company of maintaining a monopoly in the debit payments market.

According to the complaint, filed in a New York federal court on 24 September, Visa allegedly uses exclusivity agreements and the threat of penalties to prevent competition and protect its market share.

For over a decade, Visa has leveraged its dominant position, controlling more than 60% of debit transactions in the US and charging over $7 billion in processing fees annually.

The DOJ claims that Visa's exclusivity agreements penalise vendors and banks seeking to process transactions through alternative systems, effectively insulating the company from competition.

The DOJ stated:

“Visa also induces would-be competitors to become partners instead of entering the market as competitors by offering generous monetary incentives and threatening punitive additional fees. As the complaint alleges, Visa coopted the competition because it feared losing share, revenues, or being displaced by another debit network altogether.”

US Attorney General Merrick Garland stated that Visa’s monopolistic practices have driven up costs for consumers and businesses alike:

“We allege that Visa has unlawfully amassed the power to extract fees that far exceed what it could charge in a competitive market. Merchants and banks pass along those costs 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 nearly everything.”

Visa to Defend Itself in Court

Visa responded to the lawsuit by stating it is without merit and confirmed its intent to defend itself in court.

The company emphasized that it faces increasing competition, especially in the online payments space.

Julie Rottenberg, Visa's general counsel, argued:

“Anyone who has bought something online, or checked out at a store, knows there is an ever-expanding universe of companies offering new ways to pay for goods and services. 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.”

Are Payment Giants Charging Exorbitant Fees?

Merchants and retailers have frequently criticised companies like Visa for imposing what they deem excessive fees.

In March, a group of merchants agreed to a $30 billion settlement with Visa and Mastercard, concluding a lengthy antitrust battle.

However, the National Retail Federation, which represents retailers, opposed the settlement, arguing it provided inadequate compensation for businesses using Visa and Mastercard payment systems.

In June, a federal judge rejected the settlement, stating that the credit card companies needed to offer further concessions to fully resolve the dispute.

Stablecoin Will Become an Alternative?

The complaint further alleges that Visa leverages its substantial market presence and corporate assets to entice potential competitors into partnerships.

This aligns with the DOJ's claims that Visa's practices contribute to higher consumer prices, even when alternatives become available.

Analysts are beginning to speculate that Visa's dominant position among payment facilitators may be at risk, particularly with the emergence of competition from the stablecoin market.

Jan-Erik Asplund, co-founder of Sacra, noted that "stablecoins win on convenience," predicting they could surpass Visa as the preferred medium for international transactions.

In response, Visa has countered that stablecoin data is unreliable and suggests that concerns about losing its status as a global financial leader may be exaggerated.