(MENAFN- Live Mint) The US Department of Justice (DOJ) filed an antitrust lawsuit against Visa, alleging that the payment giant has stifled competition through various anti-competitive practices. The development on Tuesday sent Visa's stock price plummeting, with shares closing down approximately 5.5 per cent for the day, Reuters reported.
The DOJ's lawsuit claims that Visa , which processes over 60 per cent of debit transactions in the United States, has maintained its market dominance through questionable agreements with card issuers, merchants, and potential competitors. These practices, according to prosecutors, have allowed Visa to collect around $7 billion annually in fees from debit transactions routed through its network, the report added.
In response to the allegations, Julie Rottenberg, Visa's general counsel, defended the company's practices, stating, "When businesses and consumers choose Visa, it is because of our secure and reliable network, world-class fraud protection, and the value we provide." She added that the claims are without merit and that Visa intends to contest them vigorously, Reuters reported.
The lawsuit is part of a broader initiative by the Biden administration to address rising consumer prices, a key issue in the upcoming presidential election. Attorney General Merrick Garland emphasized the far-reaching impact of Visa's alleged conduct, saying,“Visa's unlawful conduct affects not just the price of one thing, but the price of nearly everything,” per the Reuters report.
Also Read | China test-fires ballistic missile into Pacific Ocean: 'Extremely unusual'
According to the DOJ, Visa 's anti-competitive behaviour began around 2012, following reforms that required card issuers to accommodate unaffiliated networks. The lawsuit alleges that Visa entered into agreements with potential fintech competitors like Apple, PayPal, and Square (now Block Inc.) to prevent them from releasing products that could threaten Visa's market position, the report added.
The legal action seeks to prohibit Visa from imposing pricing structures that discourage competition and paying rivals not to compete. The DOJ aims to restore competition in the debit payment processing market for online and in-store transactions.
Also Read | Israel's attack on Lebanon kills top Hezbollah chief, 560 people dead; 10 points
This lawsuit is the latest in a series of legal challenges faced by Visa and its rival Mastercard over their dominance in the payment card market. Both companies have been involved in litigation for nearly two decades and have already set aside substantial funds for potential settlements related to interchange fees.
Also Read | Visa Sued Over US Antitrust Violations in Debit Card Markets
As the legal battle unfolds, the outcome of this antitrust lawsuit could have significant implications for the payment processing industry and potentially lead to changes in how debit transactions are handled in the United States.
(With Inputs from Reuters)
MENAFN25092024007365015876ID1108712156
Legal Disclaimer:
MENAFN provides the information “as is” without warranty of any kind. We do not accept any responsibility or liability for the accuracy, content, images, videos, licenses, completeness, legality, or reliability of the information contained in this article. If you have any complaints or copyright issues related to this article, kindly contact the provider above.