https://www.cnbc.com/2024/09/24/doj-accuses-visa-of-debit-network-monopoly-that-impacts-price-of-nearly-everything.html Skip Navigation logo logo Markets * Pre-Markets * U.S. Markets * Currencies * Cryptocurrency * Futures & Commodities * Bonds * Funds & ETFs Business * Economy * Finance * Health & Science * Media * Real Estate * Energy * Climate * Transportation * Industrials * Retail * Wealth * Sports * Life * Small Business Investing * Personal Finance * Fintech * Financial Advisors * Options Action * ETF Street * Buffett Archive * Earnings * Trader Talk Tech * Cybersecurity * Enterprise * Internet * Media * Mobile * Social Media * CNBC Disruptor 50 * Tech Guide Politics * White House * Policy * Defense * Congress * Equity and Opportunity Video * Latest Video * Full Episodes * Livestream * Live Audio * Live TV Schedule * CNBC Podcasts * CEO Interviews * CNBC Documentaries * Digital Originals Watchlist Investing Club * Trust Portfolio * Analysis * Trade Alerts * Meeting Videos * Homestretch * Jim's Columns * Education * Subscribe * Sign In Join IC PRO * Pro News * Livestream * Full Episodes * Stock Screener * Market Forecast * Options Investing * Chart Investing * Subscribe * Sign In Join Pro Livestream Menu * Make It * select + ALL SELECT + Credit Cards + Loans + Banking + Mortgages + Insurance + Credit Monitoring + Personal Finance + Small Business + Taxes + Help for Low Credit Scores + Investing + SELECT + All Credit Cards + Find the Credit Card for You + Best Credit Cards + Best Rewards Credit Cards + Best Travel Credit Cards + Best 0% APR Credit Cards + Best Balance Transfer Credit Cards + Best Cash Back Credit Cards + Best Credit Card Welcome Bonuses + Best Credit Cards to Build Credit + SELECT + All Loans + Find the Best Personal Loan for You + Best Personal Loans + Best Debt Consolidation Loans + Best Loans to Refinance Credit Card Debt + Best Loans with Fast Funding + Best Small Personal Loans + Best Large Personal Loans + Best Personal Loans to Apply Online + Best Student Loan Refinance + SELECT + All Banking + Find the Savings Account for You + Best High Yield Savings Accounts + Best Big Bank Savings Accounts + Best Big Bank Checking Accounts + Best No Fee Checking Accounts + No Overdraft Fee Checking Accounts + Best Checking Account Bonuses + Best Money Market Accounts + Best CDs + Best Credit Unions + SELECT + All Mortgages + Best Mortgages + Best Mortgages for Small Down Payment + Best Mortgages for No Down Payment + Best Mortgages with No Origination Fee + Best Mortgages for Average Credit Score + Adjustable Rate Mortgages + Affording a Mortgage + SELECT + All Insurance + Best Life Insurance + Best Homeowners Insurance + Best Renters Insurance + Best Car Insurance + Travel Insurance + SELECT + All Credit Monitoring + Best Credit Monitoring Services + Best Identity Theft Protection + How to Boost Your Credit Score + Credit Repair Services + SELECT + All Personal Finance + Best Budgeting Apps + Best Expense Tracker Apps + Best Money Transfer Apps + Best Resale Apps and Sites + Buy Now Pay Later (BNPL) Apps + Best Debt Relief + SELECT + All Small Business + Best Small Business Savings Accounts + Best Small Business Checking Accounts + Best Credit Cards for Small Business + Best Small Business Loans + Best Tax Software for Small Business + SELECT + All Taxes + Filing For Free + Best Tax Software + Best Tax Software for Small Businesses + Tax Refunds + Tax Brackets + Tax Tips + Tax By State + Tax Payment Plans + SELECT + All Help for Low Credit Scores + Best Credit Cards for Bad Credit + Best Personal Loans for Bad Credit + Best Debt Consolidation Loans for Bad Credit + Personal Loans if You Don't Have Credit + Best Credit Cards for Building Credit + Personal Loans for 580 Credit Score or Lower + Personal Loans for 670 Credit Score or Lower + Best Mortgages for Bad Credit + Best Hardship Loans + How to Boost Your Credit Score + SELECT + All Investing + Best IRA Accounts + Best Roth IRA Accounts + Best Investing Apps + Best Free Stock Trading Platforms + Best Robo-Advisors + Index Funds + Mutual Funds + ETFs + Bonds * USA * INTL * Livestream Search quotes, news & videos * Livestream Watchlist SIGN IN logo Markets Business Investing Tech Politics Video Watchlist Investing Club Join IC PRO Join Pro Livestream Menu Finance Justice Department accuses Visa of debit network monopoly that affects price of 'nearly everything' Published Tue, Sep 24 20242:30 PM EDTUpdated Moments Ago thumbnail Hugh Son@hugh_son WATCH LIVE Key Points * The U.S. Department of Justice on Tuesday sued Visa, the world's biggest payments network, saying it propped up an illegal monopoly over debit payments. * The DOJ said Visa imposed "exclusionary" agreements on partners and smothered upstart firms. * Visa and its smaller rival Mastercard have surged over the past two decades, reaching a combined market cap of roughly $1 trillion. In this article * V Follow your favorite stocksCREATE FREE ACCOUNT Justin Sullivan | etty Images The U.S. Justice Department on Tuesday sued Visa, the world's biggest payments network, saying it propped up an illegal monopoly over debit payments by imposing "exclusionary" agreements on partners and smothering upstart firms. Visa's moves over the years have resulted in American consumers and merchants paying billions of dollars in additional fees, according to the DOJ, which filed a civil antitrust suit in New York for "monopolization" and other unlawful conduct. "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 DOJ release. "Merchants and banks pass along those costs to consumers, either by raising prices or reducing quality or service," Garland said. "As a result, Visa's unlawful conduct affects not just the price of one thing -- but the price of nearly everything." Visa and its smaller rival Mastercard have surged over the past two decades, reaching a combined market cap of roughly $1 trillion, as consumers tapped credit and debit cards for store purchases and e-commerce instead of paper money. They are essentially toll collectors, shuffling payments between banks operating for the merchants and for cardholders. Visa called the DOJ suit "meritless." "Anyone who has bought something online, or checked out at a store, knows there is an ever-expanding universe of companies offering new ways to pay for goods and services," said Visa general counsel Julie Rottenberg. "Today's lawsuit ignores the reality that Visa is just one of many competitors in a debit space that is growing, with entrants who are thriving," Rottenberg said. "We are proud of the payments network we have built, the innovation we advance, and the economic opportunity we enable." More than 60% of debit transactions in the U.S. run over Visa rails, helping it charge more than $7 billion annually in processing fees, according to the DOJ complaint. The payment networks' decades-old dominance has increasingly attracted attention from regulators and retailers. Litany of woes In 2020, the DOJ filed an antitrust suit to block Visa from acquiring fintech company Plaid. The companies initially said they would fight the action, but soon abandoned the $5.3 billion takeover. In March, Visa and Mastercard agreed to limit their fees and let merchants charge customers for using credit cards, a deal retailers said was worth $30 billion in savings over a half decade. A federal judge later rejected the settlement, saying the networks could afford to pay for a "substantially greater" deal. In its complaint, the DOJ said Visa threatens merchants and their banks with punitive rates if they route a "meaningful share" of debit transactions to competitors, helping maintain Visa's network moat. The contracts help insulate three-quarters of Visa's debit volume from fair competition, the DOJ said. "Visa wields its dominance, enormous scale, and centrality to the debit ecosystem to impose a web of exclusionary agreements on merchants and banks," the DOJ said in its release. "These agreements penalize Visa's customers who route transactions to a different debit network or alternative payment system." Furthermore, when faced with threats, Visa "engaged in a deliberate and reinforcing course of conduct to cut off competition and prevent rivals from gaining the scale, share, and data necessary to compete," the DOJ said. Paying off competitors The moves also tamped down innovation, according to the DOJ. Visa pays competitors hundreds of millions of dollars annually "to blunt the risk they develop innovative new technologies that could advance the industry but would otherwise threaten Visa's monopoly profits," according to the complaint. Visa has agreements with tech players including Apple, PayPal and Square, turning them from potential rivals to partners in a way that hurts the public, the DOJ said. For instance, Visa chose to sign an agreement with a predecessor to the Cash App product to ensure that the company, later rebranded Block, did not create a bigger threat to Visa's debit rails. A Visa manager was quoted as saying "we've got Square on a short leash and our deal structure was meant to protect against disintermediation," according to the complaint. Visa has an agreement with Apple in which the tech giant says it will not directly compete with the payment network "such as creating payment functionality that relies primarily on non-Visa payment processes," the complaint alleged. The DOJ asked for the courts to prevent Visa from a range of anticompetitive practices, including fee structures or service bundles that discourage new entrants. The move comes in the waning months of President Joe Biden's administration, in which regulators including the Federal Trade Commission and the Consumer Financial Protection Bureau have sued middlemen for drug prices and pushed back against so-called junk fees . In February, credit card lender Capital One announced its acquisition of Discover Financial, a $35.3 billion deal predicated in part on Capital One's ability to bolster Discover's also-ran payments network, a distant No. 4 behind Visa, Mastercard and American Express . Capital One said once the deal is closed, it will switch all its debit card volume and a growing share of credit card volume to Discover over time, making it a more viable competitor to Visa and Mastercard. Don't miss these insights from CNBC PRO * Market bull Tom Lee hesitant to jump into this post-Fed rally * Here are the stocks that win when the Fed cuts rates with no recession * Value investor Bill Nygren looking outside of crowded megacap tech, adds cheap financial stock * Some smaller stocks could see big gains as the Fed cuts rates. Here are a few CNBC logo * * * * * * * * Subscribe to CNBC PRO * Subscribe to Investing Club * Licensing & Reprints * CNBC Councils * Select Personal Finance * CNBC on Peacock * Join the CNBC Panel * Supply Chain Values * Select Shopping * Closed Captioning * Digital Products * News Releases * Internships * Corrections * About CNBC * Ad Choices * Site Map * Podcasts * Careers * Help * Contact * News Tips Got a confidential news tip? We want to hear from you. Get In Touch * CNBC Newsletters Sign up for free newsletters and get more CNBC delivered to your inbox Sign Up Now Get this delivered to your inbox, and more info about our products and services. * Advertise With Us Please Contact Us * Privacy Policy * California Consumer Privacy Act (CCPA) Opt-Out Icon * CA Notice * Terms of Service (c) 2024 CNBC LLC. All Rights Reserved. A Division of NBCUniversal Data is a real-time snapshot *Data is delayed at least 15 minutes. Global Business and Financial News, Stock Quotes, and Market Data and Analysis. Market Data Terms of Use and Disclaimers Data also provided byReuters logo