Justice Department Files Antitrust Lawsuit Against Visa Overdraft Markets
The US Department of Justice has filed an antitrust lawsuit against Visa, accusing the company of recording debit network markets in violation of Sections 1 and 2 of the Sherman Act. The complaint, filed in the US District Court for the Southern District of New York, alleges that Visa’s dominance in the debit network market has allowed it to maintain a monopoly through anticompetitive conduct, undermining choice and innovation in payment systems.
According to the complaint, Visa controls more than 60% of debits in the United States, generating more than $7 billion a year by processing these funds. The Justice Department says Visa is illegally using its monopoly to stifle competition by imposing restrictive covenants on merchants and banks, punishing them for using other debit networks. These practices are said to protect Visa’s market position and prevent the growth of lower-priced competitors.
“We suspect that Visa unlawfully amassed the ability to issue fees far in excess of what it would charge in a competitive market,” said Attorney General Merrick B. Garland. “Retailers and banks pass those costs on to consumers, by raising prices or lowering quality or service. As a result, Visa’s illegal behavior affects not just the price of one item – but the price of almost everything.”
The Justice Department’s complaint outlines Visa’s efforts to protect itself from competition by coercing would-be competitors into becoming partners, offering financial incentives and threatening punitive damages. The department says Visa’s actions have resulted in billions of dollars in additional payments to American consumers and businesses, while also slowing innovation in the debit payment system.
Deputy Chief Deputy Attorney General Benjamin C. Mizer emphasized the damage caused by Visa’s conduct: “The anti-competitive behavior of companies like Visa is leaving the American people and our entire economy in harm’s way. Today’s action against Visa reminds those who would restrict competition instead of competing on price or investing in innovation that the Justice Department will never hesitate to enforce the law on behalf of the American people.”
Visa’s position as a dominant player on both the merchant and consumer sides of the debit market gives it significant leverage. The complaint highlights that Visa’s set-aside agreements impose significant penalties on merchants and banks that do not commit to using Visa payments for nearly all withdrawals. This setup forces merchants to rely heavily on Visa, even when cheaper alternatives are available.
The Justice Department also targeted Visa’s tactics against technology companies and fintech startups. Internal Visa documents show that the company views these market newcomers as potential threats. Instead of competing with them, Visa sought deals to turn these potential competitors into partners. In 2020, the Justice Department filed an antitrust lawsuit to block Visa’s $5.3 billion purchase of Plaid, a technology company that was developing disruptive online payment options. That merger was eventually abandoned.
