The US Department of Justice has sued payments giant Visa for allegedly maintaining an illegal monopoly in the market in order to keep out smaller competitors.
In a press release, the U.S. Department of Justice announced that it is filing a civil antitrust lawsuit against Visa, accusing the payment company of illegally maintaining a dominant position in debit network markets.
Antitrust laws were created to protect consumers from predatory business behavior by limiting the power of any one company in the marketplace.
According to the US Department of Justice, Visa's monopoly in debit network markets stifles competitors and undermines efforts to develop new and innovative technologies.
The Justice Department also alleges that Visa's success in isolating itself from competitors allows it to control more than half of debit card transactions in the U.S.
"According to the complaint, more than 60% of debit transactions in the U.S. are processed through Visa's debit network, allowing it to charge more than $7 billion a year in fees for processing those transactions...
Merchants and banks pass these costs on to consumers, either by raising prices or by reducing quality or service. As a result, Visa's misconduct affects not just the price of one thing, but the price of almost everything."
The Justice Department also accuses Visa of anticompetitive behavior that causes enormous harm to consumers, merchants, and the U.S. economy.
"Visa's systematic efforts to restrict competition in debit transactions have resulted in billions of dollars in additional fees imposed on American consumers and businesses and have slowed innovation in the debit payments ecosystem. With this lawsuit, the Department of Justice seeks to restore competition in this vital market on behalf of the American public."
Visa's general counsel Julie Rottenberg reportedly said the lawsuit has no merit and that the company will aggressively defend itself in court.
âWhen businesses and consumers choose Visa, itâs because of our secure and trusted network, world-class fraud protection and the value we deliver.â
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