Visa’s shares took a sharp hit on Tuesday, dropping 5.5%, after the U.S. Department of Justice (DOJ) filed a lawsuit accusing the payment giant of violating antitrust laws. The DOJ claims Visa has suppressed competition by imposing high fees on merchants and paying off potential rivals to maintain its dominance in the debit transaction market.
Visa, which processes over 60% of U.S. debit transactions, allegedly collected $7 billion annually from fees, often referred to as "swipe" or "interchange" fees. The DOJ asserts that Visa used agreements with card issuers, merchants, and competitors to stifle competition. Additionally, Visa is accused of entering lucrative deals with companies like Apple, PayPal, and Block Inc's Square to prevent them from releasing competing products.
Visa’s general counsel, Julie Rottenberg, dismissed the lawsuit, stating that competition thrives in the debit market and that the claims are baseless. However, the DOJ seeks to block Visa’s pricing structures and stop its alleged efforts to prevent competition. This case is part of the Biden administration's broader efforts to combat rising consumer prices ahead of the 2024 presidential election.
