The US Department of Justice has filed a lawsuit against Visa, accusing the payment giant of monopolising the debit card market and engaging in anticompetitive practices that affect "the price of nearly everything".

Filed in the US District Court for the Southern District of New York, the civil antitrust suit alleges that Visa has unlawfully maintained its dominance in the debit network market by suppressing competition through threats, incentives, and agreements with merchants, banks, and potential rivals.

According to the lawsuit, Visa processes more than 60 per cent of debit transactions in the United States, generating $7 billion annually in fees. The justice department claims that Visa's conduct has resulted in inflated costs for consumers and businesses across the country.

US attorney general Merrick Garland said in a statement: "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."

The justice department's complaint outlines several ways in which Visa allegedly maintains its monopoly. These include imposing "staggering financial penalties" on merchants who do not route all or most eligible transactions through Visa's network and entering into lucrative agreements with potential competitors such as Apple, PayPal, and Block Inc's Square to prevent them from releasing products that could threaten Visa's dominance.

The lawsuit seeks a court order to block Visa from imposing pricing structures that discourage competition and from paying rivals not to compete. The justice department argues that such measures would restore competition in the debit payment processing market for both online and in-store transactions.

Visa has vehemently denied the allegations. Julie Rottenberg, Visa's general counsel, stated: "Competition is thriving in the debit market, and the claims are meritless. We will contest them vigorously. When businesses and consumers choose Visa, it is because of our secure and reliable network, world-class fraud protection, and the value we provide."

The legal action is part of the Biden administration's broader efforts to combat rising consumer prices, a key issue in the upcoming presidential election. Jon Donenberg, deputy director of the White House national economic council, commented: "The Biden-Harris administration has been clear that the American economy thrives when there is real competition."

This lawsuit follows a series of legal challenges faced by Visa and its rival Mastercard over their dominance in the cards market. In 2019, both companies agreed to pay US merchants $5.6 billion to settle damages claims in a class-action lawsuit accusing them of anticompetitive practices.

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