- Joined
- Aug 25, 2021
- Messages
- 9,415
- Reaction score
- 22,761
US sues Visa for monopoly on debit-card use affecting ‘price of nearly everything’
Government claims firm stifles competition by threatening merchants with high fees and pays off potential rivals
www.theguardian.com
The US Department of Justice has sued Visa, accusing one of the world’s largest payment networks of antitrust violations that affect 'the price of nearly everything'.
The financial giant has suppressed competition by threatening merchants with high fees and paying off potential rivals, according to the complaint, filed in the US district court for the southern district of New York.
The lawsuit alleges that Visa makes it difficult for merchants to use alternatives, like lower-cost or smaller payment processors, instead of its own payment processing technology, without incurring what prosecutors described as 'disloyalty penalties'.
Some $3.3tn in transactions were processed on Visa’s sprawling financial network in the latest quarter.
The firm processes more than 60% of debit transactions in the US, bringing it $7bn each year in fees collected when transactions are routed over its network, the justice department said. The company protects that dominance through agreements with card issuers, merchants and competitors, prosecutors allege.
The attempt to tackle such fees, sometimes known as swipe fees or interchange fees, is part of the Biden administration’s efforts to combat rising consumer prices, which have been a key issue on the presidential election campaign trail.
“We allege that Visa has unlawfully amassed the power to extract fees that far exceed what it could charge in a competitive market,” said the US attorney general, Merrick Garland, in a statement.
“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 described the complaint as 'meritless' and vowed to 'vigorously' defend itself. “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,” Julie Rottenberg, the firm’s general counsel, said.
“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 San Francisco-based company is valued at more than $500bn on the stock market. Its shares dropped by almost 5% following reports of the lawsuit.
The lawsuit seeks to have a judge in Manhattan impose requirements that would restore competition for services to process debit payments both online and at physical stores.
Jon Donenberg, deputy director of the White House National Economic Council,
said: “We do not have a comment on this DoJ lawsuit, but the Biden-Harris administration has been clear that the American economy thrives when there is real competition. This administration has also taken on credit card late fees and banking overdraft fees, and will continue working to take on other unfair junk fees on everyday transactions.”
I want to use my Mastercard and they won't let me 
