(VOR News) – The Department of Justice of the United States of America filed a lawsuit against Visa on Tuesday, asserting that the company has unfairly monopolised the market for debit cards, which has resulted in increased costs for both consumers and businesses.

According to the complaint that was submitted to the Southern District of New York, Visa is responsible for processing more than sixty percent of all debit card transactions that take place in the United States and generates more than seven billion dollars in processing fees on an annual basis.

With the intention of limiting competition and maintaining high prices, the company is accused of taking advantage of its strong market position.

The statement was made by Attorney General Merrick Garland:

“We assert that Visa has illegally acquired the authority to impose fees that significantly surpass what would be permissible in a competitive market.” Specifically, our allegations state that Visa has amassed an unreasonable amount of power in order to accomplish this thing.

In order to pass on expenses to their consumers, merchants and financial institutions either increase the prices of their goods and services or significantly reduce the quality of those goods and services. As a consequence, Visa’s illegal actions have an impact on the pricing of almost all things, not simply the prices of particular items.

It was mandated that banking institutions that issue debit cards must permit numerous payment networks in order to facilitate transactions beginning in the latter part of the year 2011. Visa and Mastercard continue to hold a significant amount of market share despite this fact.

Mastercard has demonstrated a performance that is worthy of praise. One of the arguments put out by the Department of Justice is that Visa’s service fees are so exorbitant that they make it impossible for businesses to use other networks because of the unnecessarily high costs involved.

Visa may also offer financial incentives to competitors to eradicate them from its market.

Businesses are pleased with the revelation that the case has been filed, and they are delighted with the complaint. Retailers have frequently expressed their dissatisfaction with the exorbitant expenses involved with the processing of debit and credit card payments, and they have communicated their approval of the steps that have been enacted by the Department of Justice.

According to Stephanie Martz, who serves as the chief administrative officer and general attorney for the National Retail Federation, competition can be controlled through government regulation. “However, if the processes occurring behind the point-of-sale are obstructing that, then genuine competition does not exist.”

Martz Visa concluded that “it impacts consumers as well.”

It cannot be denied that this is correct. “You are bearing the expense of these cards due to inflated prices.” Another accusation that was made against Mastercard was that the business had engaged in illegal activities with the intention of stifling competition in the debit card industry.

In the previous year, the organisation was able to satisfactorily handle a complaint that was brought to the attention of the Federal Trade Commission. In the past, the Department of Justice has initiated legal proceedings against Visa, including the complaint that was submitted and submitted on Tuesday.

Approximately four years ago, legal action was taken with the intention of preventing Visa from acquiring Plaid, a business that specialises in financial technology technologies.

According to the allegations made in the lawsuit, Visa viewed its purchase of Plaid for $5.3 billion as a “insurance policy” with the intention of preventing Plaid from competing with Visa’s profitable debit card operations. The corporations came to the conclusion that they would not go through with the agreement that was intended after a year had passed.

Visa maintains that the claim is without merit and has announced that it intends to mount an aggressive defence against the allegations.

Julie Rottenberg, the general counsel, made the following statement: “There is a continually expanding array of companies providing innovative payment methods for goods and services.”

“Individuals who have made online purchases or completed transactions at a retail establishment are cognisant of this fact.” “We take pride in the payments network we have established, the innovation we promote, and the economic opportunities we facilitate.”

SOURCE: NPR