The U.S. Department of Justice is set to file a major antitrust lawsuit against Visa Inc., accusing the payment card services giant of monopolizing the nation’s debit card market through anticompetitive conduct. The legal action is expected to be filed in federal court and is the culmination of years-long investigations that began after Visa’s failed acquisition of financial technology firm Plaid Inc. in 2021. The lawsuit is likely to allege that Visa engaged in practices such as forging exclusive agreements to prevent the expansion of rival networks and hindering the entry of technology companies into the market.
Visa’s shares fell by nearly 2% in after-hours trading following news of the impending lawsuit, signaling investor concerns about the potential consequences of the case. One key area of contention in the DOJ’s case is expected to be Visa’s practices related to “tokenization” technology, which enhances payment security by using unique tokens instead of card numbers. The Justice Department has been investigating Visa’s pricing structure for this technology, particularly how it charges merchants that do not use Visa’s tokenization service. The scrutiny of tokenization practices is not new to the industry, as Mastercard faced similar issues with the FTC over its tokenization system.
Visa introduced its tokenization service in 2014 and has issued over 4 billion tokens, with numerous merchants, including Netflix and Microsoft, adopting the technology. The company has emphasized that tokenization improves payment security and streamlines the payment process. The antitrust case against Visa comes amid increased regulatory scrutiny on Big Tech and financial service companies by the Biden administration. The administration has emphasized its commitment to addressing monopolistic practices across various sectors of the economy, as seen with the Google antitrust trial in Virginia.
The Google case involved accusations of the tech giant illegally monopolizing the U.S. digital ads market, with a federal judge ruling that Google violated antitrust laws to maintain its monopoly. Attorney General Merrick Garland hailed the ruling as a historic win for the American people, stating that no company is above the law. The cases against Visa and Google underscore the Biden administration’s focus on antitrust enforcement as a key economic policy pillar. The outcome of the 2024 presidential election could determine the future of antitrust enforcement efforts, with Ohio Senator JD Vance, a Republican, expressing support for stricter rules on mergers and antitrust measures against large tech platforms.
While some Democratic donors have expressed hopes for a potential shift in the FTC’s aggressive antitrust stance in the future, the Biden administration appears committed to enforcing antitrust laws to promote competition and address concerns about high prices and low wages. The legal action against Visa represents a significant move in the administration’s efforts to reign in monopolistic practices in various sectors of the economy. The case reflects a broader trend of increased regulatory scrutiny on companies in the tech and financial services industries, signaling a possible shift in how antitrust laws are enforced in the future.
