US files lawsuit against Visa for controlling debit card market

The U.S. Department of Justice has launched a significant antitrust lawsuit against Visa, accusing the financial services company of monopolizing the debit card market. Filed Tuesday in a New York federal court, the lawsuit alleges that Visa’s business practices have imposed excessive costs on consumers and merchants while hampering competition and innovation in the debit payments space.

The suit is the culmination of a three-year investigation by U.S. antitrust authorities, who contend that Visa’s control over debit transactions has resulted in billions of dollars in unnecessary fees. Unlike credit cards, which allow consumers to make purchases on borrowed money, debit cards facilitate direct payments from users’ bank accounts. The Justice Department claims Visa has exploited this system to stifle alternatives and maintain its dominance.

“Visa’s name is ubiquitous in the world of debit cards, but what’s less visible is the extent of its power over the financial networks that millions of Americans rely on,” said Attorney General Merrick Garland during a press briefing. “This company wields monopolistic control and has imposed hidden fees on countless transactions, all to the detriment of both consumers and businesses.”

According to the lawsuit, Visa charges about $8 billion annually in fees related to debit transactions in the U.S. market. Globally, the company handles $12.3 trillion in total payment volume. Government officials argue that Visa’s practices have particularly affected younger, less affluent consumers—a demographic whose financial concerns are expected to be a critical issue in the upcoming presidential election.

“The effects of Visa’s anti-competitive behavior are felt most acutely by those already struggling with the rising cost of living,” said Benjamin C. Mizer, Principal Deputy Associate Attorney General. “These practices disproportionately harm consumers with fewer financial resources.”

The lawsuit outlines a series of tactics Visa allegedly employed to maintain its market dominance. Among these are exclusionary agreements that prevent merchants and banks from directing transactions through competing networks or alternative payment systems. Additionally, the company is accused of entering partnerships with potential fintech competitors to neutralize emerging threats rather than fostering open competition.

Visa has also been accused of setting transaction volume commitments, which the Justice Department says compel merchants and banks to prioritize Visa’s services, even when competitors might offer more affordable options.

In a statement responding to the lawsuit, Visa’s General Counsel, Julie Rottenberg, defended the company’s practices and dismissed the government’s claims as baseless.

“This lawsuit is without merit,” Rottenberg said. “The debit card market is incredibly diverse, with a growing number of options available to consumers. Visa remains a choice for many because of the strength of our network, the security we provide, and our leading fraud protection systems.”

Visa, headquartered in San Francisco, reported robust financial results in 2022, with a global operating income of $18.8 billion and a 64 percent operating margin. Its North American division performed even more strongly, with an 83 percent margin that same year.

The lawsuit marks a critical development in the Biden administration’s broader push to address concentrated corporate power, especially in industries where competition has been stifled. This case follows other high-profile antitrust actions aimed at curbing monopolistic practices in sectors ranging from technology to pharmaceuticals.

If successful, the lawsuit could have wide-ranging implications not only for Visa but for the broader debit card and payments industry in the U.S., potentially reshaping how consumers and businesses interact with financial services.