The Justice Department filed a civil antitrust lawsuit against Visa on Tuesday, claiming the payment networking giant has monopolized debit networks, driving up merchant fees and consumer prices for nearly every product and service.
Every time you swipe your card to pay for an item, there's a swipe fee that's charged to the merchant. This fee is often passed along to customers in the form of higher prices. The Justice Department's charge alleges that Visa knowingly used its size to weed out the competition and keep these fees high.
“Merchants and banks pass along those costs to consumers, either by raising prices or reducing quality or service," Attorney General Merrick B. Garland said in a statement Tuesday. "As a result, Visa’s unlawful conduct affects not just the price of one thing -- but the price of nearly everything.”
The Department of Justice's statement says that Visa's actions have resulted in billions of dollars in additional fees for consumers and businesses and also slowed innovation.
Visa's general counsel, Julie Rottenberg, told CNET that the lawsuit is meritless and ignores the increased competition in the debit space.
"Anyone who has bought something online or checked out at a store, knows there is an ever-expanding universe of companies offering new ways to pay for goods and services," Rottenberg said in a statement. "When businesses and consumers choose Visa, it is because of our secure and reliable network, world-class fraud protection, and the value we provide."
According to the Justice Department's complaint, Visa handles over 60% of the debit transactions in the US. It charges over $7 billion in fees each year for facilitating those payments. According to Visa, there are 4.5 billion Visa cards worldwide, with 296.8 billion transactions as of June 30, 2024.
What does this mean for you?
Right now, the lawsuit against Visa won't have any immediate impact on you. If the Department of Justice is successful, it could inject competition into the debit network space, giving merchants more choice between debit processing network. Greater competition could lead to more competitive processing fees. There's a chance this could then lead to lower prices on consumer goods, but it's too early to say for sure.
The swipe fees merchants pay to debit and credit card processing networks have been a hot issue over the past few years. In June, Visa, Mastercard and retailers nearly came to a settlement that would've limited swipe fees for a number of years. However, the settlement was blocked by a judge who deemed the settlement insufficient to fix the prevailing issues.
Swipe fees totaled $172 billion in 2023, according to the Merchants Payment Coalition.
