The US Justice Department is poised to file a comprehensive antitrust lawsuit against Visa Inc., alleging that the company has unlawfully monopolized the US debit card market.
This action is expected to be officially announced as soon as Tuesday, according to sources familiar with the situation.
The lawsuit stems from a lengthy investigation into Visa’s business practices, which began following the company’s failed acquisition of the financial technology firm Plaid Inc. in 2021. The Department of Justice (DoJ) will accuse Visa of employing a variety of anticompetitive strategies to maintain its dominance in the debit card sector, including making exclusive agreements that hinder the growth of competing networks and obstructing the entry of technology firms into the market.
Visa’s stock price dropped by as much as 1.95% in after-hours trading following the news of the impending lawsuit. Both Visa and the Justice Department have declined to comment on the situation.
The impending lawsuit represents a culmination of the DoJ’s examination of Visa’s practices, which has included scrutiny of its pricing methods related to “tokenization” technology, a key component of payment processing. Last year, Mastercard Inc. settled an enforcement action related to its own tokenization practices, underscoring a broader focus on competition in the payments industry.
Visa has consistently maintained that its practices comply with applicable laws, and it has cooperated with the DoJ throughout the investigation. However, reports indicate that the Justice Department is prepared to claim that Visa has penalized customers who attempted to utilize alternative payment-processing services.
The Biden administration has adopted a rigorous approach to antitrust enforcement, targeting alleged monopolistic behavior across various industries, including technology and payment processing. Recent cases have included actions against major firms like Google, Amazon, and Apple.
Despite these challenges, Visa’s stock has seen a year-to-date increase of approximately 11%, contrasting with the S&P 500’s gain of 20%.
Bloomberg, Financial Times, and Market Watch contributed to this report.
