Justice Department Targets Visa – Accusations of Monopoly and Hidden Costs in Debit Card Market

The Justice Department set its sights on Visa—once more, a move like a slow, deliberate incision… not a strike, but a calculated cut deep into the veins of the debit card market. The claim? Visa, the giant, has turned its grasp into a chokehold—strangling competition, letting no rival breathe… leaving businesses and consumers burdened under the weight of bloated fees.

BREAKING 🚨 The Justice Department is suing Visa for unfairly stifling competition for debit card services in the U.S.$V holds around 70%–75% of the global debit card market

Stock is down over 4% https://t.co/v3dRtDySVV pic.twitter.com/r7QTxzzr1K

— Stocktwits (@Stocktwits) September 24, 2024

Sixty percent… that’s the slice Visa commands of debit card transactions across the U.S., a kingdom where they’ve been reaping billions—over $7 billion annually in processing fees alone. But what’s caught in the net isn’t just the size of their empire—it’s how they’ve kept it intact, how they’ve kept others out. The lawsuit accuses Visa of building barriers, walls so high that merchants, cornered and worn, have no choice but to stay… paying more with every passing year, passing that cost to the people who walk through their doors.

Attorney General Merrick Garland didn’t mince words. “Visa has carved out a market where they can extract fees that would be impossible in a world where real competition existed,” he said… And so it goes—the cost of what we buy, rising not just from one good, but creeping across the price of nearly everything.

This story begins further back, in 2011, when new rules demanded that banks open the gates—allowing more than one network to process debit transactions. The door, cracked open, but Visa… and Mastercard, in the shadows… clung to their control. The Justice Department claims Visa priced its services in ways that made it nearly impossible for anyone to step through that door. Even worse, they accuse Visa of keeping potential rivals at bay… paying them off to keep their distance, ensuring the landscape stays unchallenged.

🚨 DOJ sues Visa for monopolizing the debit card market

• Visa controls 60% of debit transactions
• $7 billion+ in annual fees
• Accused of penalizing merchants for using rivals
• Potentially impacts Visa’s future contracts pic.twitter.com/6X5s9jDZMi

— Los Angeles Magazine (@LAmag) September 25, 2024

For retailers, this feels like a reckoning that’s been a long time coming. The National Retail Federation’s Stephanie Martz spoke of the frustration that’s been simmering. “You can force competition into the picture,” she said… “but if what happens behind the curtain stifles it, then what’s left isn’t competition at all.” The truth, she insists, is that shoppers—every one of us—pay the price… each time we swipe, each time we check out, those invisible fees adding up… unseen, yet felt in the rising cost of the ordinary.

Visa, of course, pushes back. They call the lawsuit meritless, baseless. Julie Rottenberg, Visa’s general counsel, speaks of a world filled with options. “Anyone who’s shopped online or in-store knows… there are endless ways to pay,” she said, painting a picture of a marketplace teeming with choice, with innovation, with opportunity… a world Visa claims they’ve helped build.

But this legal dance isn’t new to Visa. Four years ago, they were in the ring once more—the government moving to block their $5.3 billion acquisition of Plaid, a fintech upstart. The Justice Department believed Visa was trying to seal up its empire, to block any cracks that could let in real competition. That deal, it fell apart, leaving Visa’s practices under the microscope… once more, their methods questioned.

Visa dropped nearly 5% following news that the US Justice Department intends to sue over its alleged debit card monopoly. Positioning is not looking kind. Big red bar building pic.twitter.com/TEDSfRCZVp

— Menthor Q (@MenthorQpro) September 25, 2024

As the lawsuit unfolds, the stakes stretch far beyond Visa’s profit margins… it’s a question of what the future holds for how we pay, and who truly profits from every card we swipe.

Major Points:

• The Justice Department has filed a lawsuit accusing Visa of monopolizing the debit card market and stifling competition.
• Visa commands over 60% of U.S. debit transactions, earning billions in processing fees, with accusations of keeping rivals at bay.
• Retailers argue that Visa’s practices push up costs for consumers, making everyday goods more expensive.
• Visa denies wrongdoing, claiming the payments industry is filled with options and innovations.
• This isn’t Visa’s first legal battle with the Justice Department, as they previously faced scrutiny over their failed acquisition of fintech firm Plaid.

Susan Guglielmo – Reprinted with permission of Whatfinger News