The United States Department of Justice (DOJ) has filed an antitrust suit against payment giant Visa, accusing the company of exploiting a monopoly in the debit payments sector.
Alleged Payments Monopoly
A complaint filed in a federal court in New York on September 24 alleged that Visa uses exclusivity agreements and the threat of penalties against vendors to prevent competition from infringing on the company's market share. Visa reportedly commands a 60% market share in the US debit transactions sector, allowing the firm to reap $7 billion in transaction fees alone. US Attorney General Merrick Garland stated that Visa's conduct was monopolistic and has served as a catalyst for increased prices. He added: “We allege that Visa has unlawfully amassed the power to extract fees that far exceed what it could charge in a competitive market. 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.”
Transaction Alternatives
The complaint also alleges that Visa uses its market size and corporate holdings to entice would-be competitors into partnerships. This, purportedly, would align with the DOJ’s allegations that Visa’s practices lead to increased prices for consumers even when alternatives enter the marketplace. As Cointelegraph reported, analysts have begun raising the specter of Visa losing its market-leading status among payment facilitators due to competition from stablecoins. Sacra co-founder Jan-Erik Asplund argued that stablecoins win on convenience, ultimately predicting that they could outpace Visa as the go-to transaction medium for international payments. Visa, in response, has argued that stablecoin data is noisy and the threat of losing its position as a global financial facilitator has been overhyped.
Response to the News
Meanwhile, outside the US, stablecoins have begun to overtake fiat currency as the dominant payment method in multiple markets.
The US DOJ continues to file antitrust lawsuits aimed at protecting competition and lowering prices for consumers. The case against Visa is expected to attract significant media attention.
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