Feds allege Visa monopoly of debit cards

The U.S. Department of Justice on Tuesday sued Visa, alleging that the finance giant used unlawful practices to assemble and maintain a monopoly on the debit card market. Visa controls roughly 60 percent of all debit card transactions in the United States, the lawsuit claimed. During a retail transaction, Visa’s system allows the direct transfer of funds from the consumer's bank to the merchant’s bank. Tens of millions of Americans use debit cards, and many prefer them because they avoid the lending dynamic of credit cards, the DOJ said.

What does Visa have to say? The DOJ’s lawsuit is meritless and ignores the fact that Visa is just one of many competitors in the debit card marketplace, Visa’s General Counsel Julie Rottenberg told WORLD. When banks and merchants choose to work with Visa it is because of their security, dependability, and anti-fraud protections, Rottenberg added.

How is the finance giant alleged to have broken the law? Visa maintains its market dominance and stifles competition by ensnaring many merchants and banks in exclusionary agreements, the DOJ alleged. Because of Visa’s dominance, consumers often find it difficult to use alternative debit card systems, federal prosecutors said. Furthermore, Visa often induces its competitors to partner with them rather than compete, the DOJ argued. Both those behaviors violate the Sherman Antitrust Act, U.S. Attorney General Merrick Garland said in a speech Tuesday afternoon.

Dig deeper: Read my report in The Sift about how Google recently lost an antitrust lawsuit over online advertising.