Visa shares dropped by 5.5% on Tuesday after the U.S. Department of Justice (DOJ) filed a lawsuit accusing the payment giant of violating antitrust laws.
The DOJ claims Visa suppressed competition by imposing high merchant fees and paying off potential competitors. Visa processes over 60% of debit transactions in the U.S., generating $7 billion annually through fees.
The DOJ alleges Visa maintains this dominance through agreements with card issuers, merchants, and rivals.
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Visa's general counsel, Julie Rottenberg, defended the company, stating that competition is thriving in the debit market and that the DOJ's claims are baseless. She emphasized Visa's value in providing a secure, reliable network and top-notch fraud protection.
This lawsuit is part of the Biden administration's broader effort to address rising consumer costs, a key issue ahead of the November presidential election between Kamala Harris and Donald Trump.
Attorney General Merrick Garland noted that Visa's practices affect the prices of nearly everything, as payment network fees are often passed on to consumers.
According to the DOJ, Visa's alleged anticompetitive conduct started in 2012, as new players entered the payment market due to reforms.
Visa reportedly struck deals with companies like Apple, PayPal, and Square to prevent them from releasing competing products. The company also penalized merchants who didn’t route most of their transactions through its network.
The DOJ seeks a court order to block Visa from imposing anti-competitive pricing structures and agreements. Visa and Mastercard have faced similar legal challenges for years, and Visa has already allocated $1.6 billion for potential settlements in related cases.
