The US Department of Justice has sued Visa, accusing one of the world’s largest payment networks of antitrust violations that impact “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 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 bid 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.”
The San Francisco-based company, valued at more than $500bn on the stock market, did not immediately respond to a request for comment on Tuesday. Its shares dropped by almost 5% following reports of the lawsuit.
Visa’s alleged anticompetitive conduct began around 2012, as competing companies entered the payments space following reforms that required card issuers to accommodate unaffiliated networks, a senior justice department official said.
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