The United States Justice Department Files Anti-Competition Lawsuit Against Visa

On September 24th, the United States Justice Department filed a civil antitrust lawsuit in the U.S. District Court for the Southern District of New York against Visa Inc. for allegedly engaging in anti-competitive conduct through its monopolization of debit payment network markets in violation of The Sherman Antitrust Act of 1890 (26 Stat. 209, 15 U.S.C.§§ 1–7), which makes illegal any contract, combination or conspiracy that serves as a restraint of trade.

A debit payment network provides a technology infrastructure and set of corresponding business rules that together enable buyers and sellers to conduct real-time, secure payment debit transactions for goods and services of all kinds. More than 60% of all national debit transactions operate on Visa’s debit network alone, and the company charges approximately $7 billion in fees annually for processing them. Leveraging its enormous power, Visa has engaged in anti-competitive behavior by requiring its merchant and banking clients to execute exclusionary agreements prohibiting their use of competing debit payment networks and imposing penalties on those entities violating such restrictive covenants.

Visa has also stifled its competition by demanding “volume commitments” from its merchants and their respective financial institutions. Pursuant to the Department’s complaint, “These agreements penalize Visa’s customers who route transactions to a different debit network or alternative payment system.” Visa’s actions have forced many smaller, less-expensive networks to become partners with Visa instead of competing with it. In fact, several such networks, including PayPal, Apple, and Square, have been offered significant financial incentives to comply with Visa’s expectations. As Visa’s former CFO once stated, “Everybody is a friend and partner. Nobody is a competitor.”

Per the Justice Department’s complaint, Visa’s monopolistic actions have allowed the credit card company to materially increase costs at the customer’s expense. It has also impaired industry growth, hindering the development of novel and potentially more efficient payment alternatives. Per Attorney General Merrick B. Garland, “We allege that Visa has unlawfully amassed the power to extract fees that far exceed what it could charge in a competitive market,” and “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.”

By filing this lawsuit, the Justice Department is seeking to hold Visa responsible for its actions and restore competition to the debit payment network market on behalf of consumers everywhere. Pursuant to Principal Deputy Associate Attorney General Benjamin C. Mizer, “Anticompetitive conduct by corporations like Visa leaves the American people and our entire economy worse off…Today’s action against Visa reminds those who would stifle competition rather than competing on price or investing in innovation that the Justice Department will never hesitate to enforce the law on behalf of the American people.”

This is not the first time Visa has been sued in connection with its monopolistic practices. For instance, in 2020, the Justice Department filed a civil antitrust lawsuit against the company, preventing it from acquiring Plaid, a disruptive technology business that powers financial technology apps creating alternative options for online debit payments. Visa was forced to abandon its plan to acquire Plaid for approximately $5.3 billion. Additionally, both Mastercard and Visa have been made subject to a class-action lawsuit filed in 2005 that addresses the companies’ onerous swipe fees. This suit has been settled, in part, through a $5.6 billion payment made in 2023. An additional $30 billion settlement, however, was rejected this past June by Judge Margo Brodie of the US District Court of the Eastern District of New York.

The Department’s complaint against Visa does not request specific remedies, although regulators are seeking to enjoin Visa from continuing to engage in their monopolistic contract and pricing practices. Denying the accusations, Visa has pledged to mount a robust defense. Pursuant to Julie Rottenberg, the company’s general counsel, “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.” The Justice Department’s filing comes as no surprise to Visa, as their actions have been under investigation since 2021.

The lawsuit is part of a more comprehensive attack by the Justice Department on large-scale financial and technology behemoths, both in the United States and abroad. Per Byron James, a partner in the UAE-based law firm Expatriate Law, “Regulatory bodies in the UAE and broader Middle East are increasingly aligned with international trends, and any structural changes in Visa's operations could lead to similar reforms or scrutiny in these regions,"

Visa Inc. is a Delaware corporation and public company headquartered in San Francisco, California. It currently maintains a global operating income of approximately $19 billion. Visa processes over $12 trillion in total payment volume globally.