The Department of Justice of America will initiate a lawsuit against Visa, accusing the company of monopolistic practices by using its dominance in the debit card market to coerce partners and customers not to use competitors’ services, according to Bloomberg, which broke the news.
The New York Times, which confirmed DOJ’s plans, said there is evidence that Visa illegally harmed its customers, especially merchants, when they tried to use other payment services.
In America, 70% of debit transactions are made with Visa cards. The dominance has increased significantly in recent years. It was 50% in 2007.
Visa processes $3.8 trillion in debit transactions per year in America alone, and, according to the Department of Justice, earns $7 billion in fees.
The company is also expected to be indicted for using its market power to coerce payment technology services to maintain a partnership with Visa, preventing potential competitors from entering the competition for contracts.
The news caused Visa’s shares to drop more than 4% in early afternoon trading.
The Wall Street Journal reported that the DOJ is investigating whether there are antitrust violations in the incentives Visa offered to PayPal, Square, and Stripe – three of the main digital payment platforms in America.
According to the WSJ, Visa allegedly used card security tokens to prevent them from being processed by other payment systems.
Mastercard, suspected of doing the same, reached an agreement with the Federal Trade Commission at the end of 2002. Data must be shared with other payment networks.
In 2020, the Department of Justice moved to block Visa’s $5.3 billion acquisition of Plaid because the purchase would remove a competitor from the market. This is where the antitrust investigation that led to the lawsuit originated.
According to American media, federal prosecutors have interviewed hundreds of representatives from trade and financial sectors to understand Visa’s policies in benefits and penalties.
The company has not yet commented on the case.
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Arwen Volkov, A graduate of the University of St. Gallen in Switzerland with a degree in International Finance, Arwen specializes in sustainable finance and green investments. She began her career at an investment bank in London, where she developed financing models for environmentally friendly projects. Known for her analytical and strategic thinking skills, Arwen is a sought-after financial consultant. In her spare time, she mentors fintech startups, contributing to their growth strategies. She is also a nature enthusiast and an amateur photographer.
