WASHINGTON (Diya TV) — The United States’ Justice Department has filed a lawsuit against Visa Inc., accusing the company of maintaining an illegal monopoly in the market of electronic payments, which increases costs for consumers and businesses alike. According to the government, this would be detrimental to competition and pricing.
The Justice Department, in a complaint filed in a federal court, says that Visa’s practices have erected an obstacle between smaller payment processors and consumers, causing higher fees on every transaction passed on to consumers. The department claims control exercised by Visa over the market has inflated prices for a wide-ranging spectrum of goods and services as nearly everything benefits from electronic payments.
“Visa’s anticompetitive conduct harms not just merchants, but also consumers who have to pay more for everyday items,” said Deputy Attorney General Lisa Monaco. “We stand committed to the fair functioning of our economy, and no company shall operate as gatekeeper in the marketplace.”
The complaint itemizes several practices the Justice Department claims have suppressed competition: exclusive agreements with merchants and restrictive terms for businesses wishing to use competing payment systems. These, the Justice Department says, are part of what has helped Visa command a share of the credit and debit card market that tops 50%.
Visa said in response to the lawsuit that its business was healthy and reaped benefits both for consumers and merchants by offering safe and efficient means of payment. “Visa has a long history of fostering innovation and competition in the payments space,” said a company spokesperson. “We will vigorously defend our business model and the benefits it brings to millions of consumers and businesses.”
This case goes beyond Visa in the sense that it raises a query over the overall structure of the payments industry. Analysts say that were the Justice Department to succeed, this would likely bring immense changes in the process of conducting payment processing, thus creating room for new entrants in the market with the potential of easy profitability by driving costs lower.
Part of a broader effort by the Biden administration to scrutinize big tech and financial companies for anti-competitive behavior, the legal fight is part of a fresh wave of efforts by regulators to sharpen their focus on monopolistic practices across various sectors, including technology and finance.
As this case works its way through court, consumers and business owners alike will be paying close attention to see just how this challenge to Visa’s practices could reshape the payments landscape in the United States.