US accuses Visa of monopolizing debit card swipes

Sept 24 (Reuters) – The U.S. Justice Division has ordered Visa (U.Nopens a brand new tab over alleged antitrust violations Tuesday, accusing one of many world’s largest cost networks of stifling competitors by threatening retailers with excessive charges and paying off potential rivals.

Visa processes greater than 60% of debit transactions within the U.S., producing $7 billion yearly in charges collected when transactions are routed by its community, in keeping with the Justice Division. The corporate protects that dominance by agreements with card issuers, retailers and rivals, prosecutors allege.

The bid to deal with the charges, often known as swipe charges or interchange charges, is a part of the Biden administration’s efforts to fight rising shopper costs, a key situation within the Nov. 5 presidential election between Democrat Kamala Harris and Republican Donald Trump.

“Visa’s illegal conduct impacts not simply the value of 1 factor, however the worth of just about all the pieces,” Lawyer Normal Merrick Garland mentioned in an announcement, noting that retailers and banks go cost community charges on to shoppers.

Visa’s alleged anticompetitive conduct started round 2012, when rival corporations entered the funds world following reforms that required card issuers to accommodate unaffiliated networks, a senior Justice Division official mentioned.

The lawsuit seeks to have a Manhattan decide impose necessities that will restore competitors for debit cost processing companies, each on-line and in brick-and-mortar shops.

The Justice Division’s Antitrust Division started investigating Visa for its debit card practices in 2021, the identical yr it blocked Visa’s acquisition of economic expertise firm Plaid. Rival Mastercard (MA.Nopens a brand new tab mentioned in April that it was additionally being investigated by the Justice Division.

Each corporations have been embroiled in lawsuits for practically 20 years over their dominance of the cardboard market.

Visa and Mastercard agreed in 2019 to pay U.S. retailers $5.6 billion to settle damages claims in a class-action lawsuit accusing them of anticompetitive practices.

A federal decide in Brooklyn rejected in June a parallel settlement that will minimize swiping charges by an estimated $30 billion over 5 years and require Visa and Mastercard to carry some guidelines that prohibit retailers from charging prospects for utilizing their playing cards.

Visa has put aside about $1.6 billion for potential settlements in different U.S. interchange payment circumstances.