The US Justice Department has initiated legal action against Visa, alleging that the company has been operating an illegal monopoly in the debit card market for over a decade. The lawsuit claims that Visa has leveraged its market dominance to compel businesses to utilize its payment network at the expense of alternative providers and to hinder new market entrants.

Attorney General Merrick Garland has been quoted as saying, "We allege that Visa has unlawfully amassed the power to extract fees that far exceed what it could charge in a competitive market." This has resulted in merchants and financial institutions passing on these excessive costs to consumers, either through increased prices or a reduction in service quality, affecting the prices of a broad range of goods and services.

In response to the allegations, Visa has dismissed the lawsuit as without merit and pledged to vigorously defend its position in court. Visa's general counsel, Julie Rottenberg, stated that the company faces robust competition in the online payment sector and that the lawsuit overlooks the reality of a thriving debit market with numerous competitors.

This antitrust lawsuit is part of a series of major enforcement actions by the Justice Department, which has also targeted other companies for alleged market manipulation, including actions against a real estate company accused of inflating rents and Ticketmaster's parent company Live Nation, as well as securing a judgment against Google for antitrust violations in its search business.

The lawsuit comes on the heels of the Justice Department's previous attempt to prevent Visa from acquiring the financial technology startup Plaid for $5.3 billion, a deal that was abandoned after the legal challenge.

According to the complaint, Visa processes over 60% of all debit transactions in the US, allowing it to charge more than $7 billion in processing fees annually. The Justice Department asserts that Visa maintains its control through exclusivity agreements that penalize vendors and banks seeking to use alternative transaction systems, thereby shielding itself from competition.

The department further alleges that Visa has attempted to convert potential competitors into partners by offering financial incentives and threatening additional fees, as part of a strategy to prevent competition and protect its market share.

This legal action follows a long-standing complaint from merchants and retailers regarding the high fees imposed by credit card companies like Visa. In March, a group of merchants reached a $30 billion settlement with Visa and Mastercard after a protracted antitrust dispute. However, the National Retail Foundation, which represents retailers, opposed the settlement, claiming it did not provide adequate compensation for businesses using Visa and Mastercard payment systems. In June, a federal judge rejected the settlement, insisting that the credit card companies must offer greater concessions to settle the dispute.