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The U.S. Department of Justice filed a lawsuit Tuesday visaAlipay, the world’s largest payments network, says it supports an illegal monopoly on debit payments by imposing “exclusive” agreements on partners and suppressing upstart companies.
Visa’s actions over the years have resulted in billions of dollars in additional fees for U.S. consumers and merchants, according to the U.S. Department of Justice, which filed a civil antitrust lawsuit in New York citing “monopoly” and other illegal conduct.
“We allege that Visa unlawfully accumulated authority to charge fees that far exceeded those it would charge in a competitive market,” Attorney General Merrick Garland said in a Justice Department press release.
“Merchants and banks pass these costs on to consumers by raising prices or reducing quality or service,” Garland said. “So Visa’s illegal conduct affects the price of not just one item, but virtually everything.”
Visa and its smaller rivals MasterCard These currencies have surged over the past two decades to a total market capitalization of about $1 trillion as consumers use credit and debit cards instead of paper money for store purchases and e-commerce. They are essentially toll collectors, disbursing payments between the merchant’s bank and the cardholder.
According to the DOJ complaint, more than 60% of debit transactions in the United States are conducted through Visa channels, resulting in more than $7 billion in fees.
But the dominance of payments networks is increasingly causing concern among regulators and retailers.
In 2020, the U.S. Department of Justice filed an antitrust lawsuit to prevent Visa from acquiring financial technology company Plaid; the two companies initially said they would resist the action, but soon abandoned the $5.3 billion deal.
In March, Visa and Mastercard agreed to limit fees and allow merchants to charge customers for using credit cards, a deal that retailers said saved $30 billion over five years.
“Visa used its dominance, massive scale and central position in the debit ecosystem to impose a series of exclusive agreements on merchants and banks, the Justice Department said in its press release. Visa customers on the network or alternative network will be penalized.
This story is developing. Please check back for updates.
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