DOJ sues Visa for locking out rival payment platforms

The Department of Justice has filed an antitrust lawsuit against Visa, alleging that the financial services firm has an illegal monopoly over debit network markets and has attempted to unlawfully crush competitors, including fintech companies like PayPal and Square. The lawsuit, which was first rumored by Bloomberg, follows a multiyear investigation of Visa which the company disclosed in 2021.

“We allege that Visa has unlawfully amassed the power to extract fees that far exceed what it could charge in a competitive market,” Attorney General Merrick Garland said in a statement. “Merchants and banks pass along those costs to consumers, either by raising prices or reducing quality or service. As a result, Visa’s unlawful conduct affects not just the price of one thing — but the price of nearly everything.”

Visa makes more than $7 billion a year in payment processing fees alone, and more than 60 percent of debit transactions in the United States run on Visa’s network, the complaint claims. The government alleges that Visa’s market dominance is partly due to the “web of exclusionary agreements” it imposes on businesses and banks. Visa has also attempted to “smother” competitors — including smaller debit networks and newer fintech companies — the complaint alleges. Visa executives allegedly feel particularly threatened by Apple, which the company has described as an “existential threat,” the DOJ claims.

According to the complaint, Visa entered into paid agreements with potential competitors as part of an effort to fend off competition from newer entrants into the payment processing industry. These practices have allowed Visa to build an “enormous moat” around its business, the complaint alleges.

Regulators have had their eyes on Visa for a while. In 2020, the DOJ filed a civil antitrust lawsuit to stop Visa’s $5.3 billion acquisition of Plaid, a fintech company, arguing that Visa was attempting to snuff out a “payments platform that would challenge Visa’s monopoly.” Acquiring Plaid, the DOJ’s complaint claimed, was Visa’s “insurance policy” to protect against a “threat to our important US debit business.” Visa and Plaid scrapped their plans for a merger in 2021 as a result of the DOJ’s lawsuit. 

Payment processors are a ubiquitous part of Americans’ lives, and they’re increasingly powerful internet gatekeepers. In 2020, Visa and Mastercard stopped processing payments on Pornhub after reports of illegal content on the site. The following year, OnlyFans announced (before ultimately abandoning) a ban on “explicit sexual content,” citing payment processors’ reticence to work with the website because of its reputation as a porn platform. But the DOJ argues that Visa didn’t come by this dominance fairly — and it’s taking steps to stop it.