The US Department of Justice has filed an antitrust lawsuit against Visa alleging that the company illegally maintains a monopoly over debit card networks in the US.
According to the suit, filed in a federal court in New York, Visa's practices have resulted in billions of dollars in additional fees for U.S. consumers and businesses while slowing innovation in the debit payments ecosystem.
The lawsuit comes after years of U.S. antitrust scrutiny of Visa's business practices.
"We allege that Visa unlawfully amassed the power to extract fees far in excess of those it could charge in a competitive market," Attorney General Merrick Garland said in a statement.
According to the lawsuit, Visa collects about $8 billion in debit card network fees in the U.S. annually. Globally, Visa processes $12.3 trillion of the total payment volume.
The Justice Department alleges that Visa imposes exclusion agreements on merchants and banks, penalizing customers who route transactions through different networks or alternative payment systems.
It also alleges that Visa has sought to neutralize potential threats from technology companies and fintech startups by entering into partnership agreements rather than allowing them to compete directly.
The DOJ alleges that Visa imposes transaction volume obligations that effectively penalize merchants and banks for using competitors, even when those competitors offer lower prices.
Through these tactics, Visa maintains a "huge moat of protection" around its business that helps it make big profits.
Headquartered in San Francisco, Visa reports global operating income of $18.8 billion and an operating margin of 64% in 2022.
The company's North American operations boast an 83% operating margin in the same year. | BGNES
