The U.S. Justice Department has filed a civil antitrust suit against Visa, the world's largest payments network, alleging that the company has maintained an illegal monopoly over debit payments through exclusionary agreements with partners and stifling competition from upstart firms. According to the DOJ, Visa's actions have resulted in American consumers and merchants paying billions of dollars in additional fees, ultimately affecting the prices of goods and services.
Visa, along with its rival MasterCard, has seen significant growth in the past two decades, reaching a combined market cap of roughly $1 trillion. However, their dominance in the market has raised concerns among regulators and retailers. In 2020, the DOJ filed a suit to block Visa's acquisition of fintech company Plaid, and in March, Visa and Mastercard agreed to limit their fees and allow merchants to charge customers for using credit cards in a deal worth $30 billion in savings over five years.
The DOJ alleges that Visa has used its dominance and scale in the debit ecosystem to impose exclusionary agreements on merchants and banks, penalizing customers who route transactions through alternative payment systems. In response to threats from competitors, Visa has engaged in conduct to cut off competition and prevent rivals from gaining the necessary scale to compete.
President Joe Biden's administration has taken a strong stance against monopolistic practices in various industries, including the pharmaceutical and financial sectors. In a recent development, credit card lender Capital One announced its acquisition of Discover Financial in a $35.3 billion deal aimed at strengthening Discover's position in the payments industry as a competitor to Visa and Mastercard.