Topline
The Justice Department sued financial services giant Visa for allegedly violating antitrust laws in its debit card business, which accounts for an estimated 60% of all debit transactions in the country.
A Visa debit card lies next to a reader.
Key Facts
“Visa has unlawfully amassed the power to extract fees that far exceed what it could charge in a competitive market,” according to Attorney General Merrick Garland.
Garland added the fees Visa charges merchants “affects not just the price of one thing – but the price of nearly everything.”
Visa stock was down almost 5% in Tuesday trading, losing about $25 billion in market capitalization.
The company did not immediately respond to Forbes’ request for comment, but shared in 2021 it faced a regulatory probe over its debit card services.
Crucial Quote
“Visa maintains its dominant position not by competing on a level playing field but by insulating itself from competition through exclusionary and anticompetitive means” by making it difficult for smaller firms to break into the debit market, federal prosecutors alleged in the complaint filed Tuesday.
Big Number
$7 billion. That’s how much Visa charges in debit card fees annually, according to the Justice Department.
Key Background
The 13th-most valuable public U.S. company, Visa essentially makes its money by charging middle man fees to banks and merchants for processing the transactions. Several outlets reported late Monday the Justice Department was prepared to soon announce its lawsuit. Visa’s only major competitor in the debit card space is Mastercard, which controls less than 25% of debit transactions, according to prosecutors.
