The Department of Justice is suing Visa
60% of debit transactions in the US run on the company’s network
Yesterday, the Department of Justice announced that it’s suing Visa for monopolizing the debit payment market, alleging that the company paid competitors like PayPal to stay out of its way and entered into various agreements with merchants that meant they could face penalties for using alternative providers.
Debit dominance
On the face of it, Visa looks a lot like a monopoly. The company’s ~60% share of all US debit card transactions helps it rack up more than $7 billion in processing fees, according to the DOJ, with Attorney General Merrick Garland observing: “Visa’s unlawful conduct affects not just the price of one thing – but the price of nearly everything”. It’s not just in America either, as debit payments have become an increasingly important part of Visa’s global business too.
In 2009, Visa processed $2.68 trillion in payments, with around a third coming from debit transactions, while credit cards accounted for almost 55%.
Fast forward almost 15 years, and about $86 trillion worth of Visa transactions later, the bulk now comes from debit cards, which accounted for 45% (a whopping $5.5 trillion) of all Visa payments.
The new lawsuit marks the first major antitrust case in the financial services industry under Biden, though the administration has been looking into Visa’s debit market practices since 2021. Given its staggering market share, as well as the company’s rising processing fees, which have drawn the attention of other regulators around the world, many may feel that the DOJ’s action could have come a little sooner.
