The U.S. Department of Justice has taken Visa to court, accusing the financial behemoth of exerting undue pressure on merchants and partners to perpetuate debit card practices that suppress competition. The lawsuit, filed Tuesday, argues that Visa’s behavior constitutes a breach of antitrust laws, creating a monopolistic grip over the debit card market by crafting what the DOJ calls a “web of exclusionary agreements”, which allegedly penalize merchants who attempt to use alternative payment processors, effectively stifling Visa’s rivals.
At the heart of the complaint is the assertion that Visa’s dominance isn’t just harmful to competition; it’s also detrimental to consumers. Attorney General Merrick Garland pointed out how merchant fees—levied every time a consumer uses a Visa card—inevitably lead to higher prices across a wide range of purchases. “Visa’s unlawful conduct affects not just the price of one thing — but the price of nearly everything,” Garland said during Tuesday’s announcement.
The Justice Department is seeking an injunction to curb Visa’s pricing structures and restrictive contract practices, aiming to restore fair competition in the payments space.
Julie Rottenberg, the company’s general counsel, dismissed the lawsuit as baseless, arguing that Visa operates in a highly competitive debit market. “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,” she remarked.
The legal confrontation comes after years of scrutiny. Visa had previously disclosed, in a 2021 securities filing, that it was aware of a Justice Department investigation into its debit card operations, hinting that the company had been bracing for this moment for some time.
The lawsuit revolves around Visa’s core business model, which charges merchants fees whenever customers use debit or credit cards bearing the Visa logo. Visa’s infrastructure underpins trillions of dollars in transactions annually, with more than 60 percent of all U.S. debit transactions passing through its payment rails. The Justice Department estimates that Visa earns at least $7 billion each year from merchant fees alone.
These fees, along with Visa’s widespread dominance, are what the DOJ argues keep the company’s rivals from gaining a foothold. By entering into agreements with merchants and financial institutions, Visa allegedly pressures them into “volume commitments,” effectively locking them into using Visa’s payment system for the vast majority of their card transactions. Failure to comply, according to regulators, can result in steep penalties—what the DOJ refers to as “disloyalty fees”—being imposed on all transactions processed through Visa.
The DOJ further claims that Visa strategically undercuts its competitors before they have a chance to grow, striking deals with potential challengers that prevent them from reaching the scale needed to compete. One such example cited in the lawsuit is Visa’s relationship with Square, a payments company. According to Garland, Visa kept Square on what one executive described as “a short leash,” ensuring that the smaller firm couldn’t break free from Visa’s influence and pose a genuine threat.
Square has yet to comment on the lawsuit.
Back in 2020, the Justice Department intervened to block Visa’s $5.3 billion acquisition of Plaid, a fintech firm that helps connect consumers’ bank accounts to apps. The DOJ argued that the deal would have cemented Visa’s dominance in the payments industry and further stifled competition.
Visa, along with its competitor Mastercard, has also been battling a long-standing class-action lawsuit over card swipe fees since 2005. While part of that dispute was settled with a $5.6 billion agreement last year, a separate $30 billion settlement was struck down by a federal judge just this past June, keeping the litigation alive.
