He United States Department of Justice filed a lawsuit on Tuesday against Visa, which he accuses of illegally maintaining a monopoly over debit card networks in the country.
According to the complaint, filed in a New York court, Visa’s practices resulted in billions of dollars in additional charges for American consumers and businesses, as well as stifling innovation in debit payments.
“We allege that Visa has unlawfully gained the power to charge fees that far exceed what it could charge in a competitive market,” said the Attorney General (Minister of Justice), Merrick Garland, in a statement.
“Visa is the first name many debit card users see when they pull out their card to buy something. But they don’t see the role Visa plays behind the scenes,” Garland added later, speaking to reporters.
“There, it controls a complex network of businesses, financial institutions and consumers” and behaves like a “monopoly,” he added.
According to the complaint, Visa charges around $8 billion annually for the use of its network in the United States on the total volume processed. Globally, Visa processes $12.3 trillion in payments each year.
The Justice Department alleges that Visa imposes exclusionary agreements on merchants and banks, thereby penalizing customers who use other debit networks or alternative payment systems.
Visa also seeks to neutralize potential threats to its market dominance from technology companies and startups through partnership agreements rather than allowing them to compete directly, he said.
Visa imposes volume minimums to process and thus punishes businesses and banks for using competitors, even when their rivals offer lower prices, he says.
Through these tactics, Visa maintains a “huge cushion” of protection around its business, allowing it to reap huge profits, the report added.
In a statement, Visa’s legal counsel, Julie Rottenberg, The court called the lawsuit “meritless.” It also denied that Visa exercises a monopoly, and described the debit card market as “an ever-expanding universe of companies offering new ways to pay for goods and services.”
“When businesses and consumers choose Visa, it’s because of our secure and reliable network, our great fraud protection, and the value we offer,” Rottenberg added. On Wall Street, Visa fell sharply, 5.49%, after the announcement of the lawsuit.
Source: Ambito
I am an author and journalist who has worked in the entertainment industry for over a decade. I currently work as a news editor at a major news website, and my focus is on covering the latest trends in entertainment. I also write occasional pieces for other outlets, and have authored two books about the entertainment industry.
