The US Department of Justice has filed an antitrust lawsuit against Visa. The agency accuses the company of having an undue monopoly in the debit card market and trying to illegally suppress competitors, including fintech companies such as PayPal and Square. This was reported by The Verge.
“We allege that Visa has unlawfully amassed the power to extract fees that far exceed what it could charge in a competitive market,” U.S. Attorney General Merrick Garland said in a statement.
According to him, sellers and banks pass these costs on 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,” the Prosecutor General also said in a statement.
The lawsuit says that Visa earns more than $7 billion a year in payment processing fees alone, and more than 60% of debit transactions in the United States go through the Visa network.
It is argued that Visa's market dominance is partly due to the "web of exclusive agreements" it imposes on businesses and banks. Visa is also trying to push out competitors, including smaller debit networks and new fintech companies.
Visa executives allegedly feel particularly threatened by Apple, which the company called an "existential threat," the DOJ claims.
The lawsuit also alleges that Visa entered into agreements with potential competitors as part of an effort to protect itself from competition from new entrants to the payment processing industry. This practice allegedly allowed Visa to build a "huge moat" around its business.
The lawsuit against Visa is the result of a multi-year investigation by the US Department of Justice into the company's business practices.