The US Department of Justice announced that it has opened an antitrust case against Visa, a leader in the financial services sector. It is alleged that Visa misuses its market dominance to obstruct competition and this negatively reflects on consumer prices. This case was particularly filed due to Visa’s attempts to increase its competitive advantage against other payment system companies like PayPal, Square.
Visa’s 2020 attempt to acquire financial technology company Plaid for $5.3 billion was blocked by the Department of Justice as it was found to restrict competition. This incident led to a comprehensive investigation into Visa’s business practices. The Department of Justice states that Visa’s agreements with banks and other businesses increase its control over the market, which raises market prices. According to Attorney General Merrick Garland, this situation not only increases the cost of certain products but generally raises the cost of many products in the market.
Visa Argues the Case is Unjustified
Visa’s General Counsel Julie Rottenberg defended the case as unjustified, stating that Visa’s competitive advantage in the market stems from factors such as security fraud protection and brand value. Rottenberg also mentioned the annual fee revenue of $7 billion that Visa earns from debit card transactions.
The outcome of this case could lead to significant changes in the electronic payment systems market. The effects of the case are expected to lead to extensive discussions on competition policies and consumer prices. Sharing views from users and market analysts on this issue will help us better understand the possible outcomes.