The Department of Justice may sue the card network behemoth Visa as soon as today, according to multiple reports citing anonymous sources.

The antitrust lawsuit will focus on Visa’s alleged efforts to illegally monopolize the debit card market, according to the reports from Bloomberg and Politico citing anonymous sources. Visa’s anticompetitive actions are related to the payment processing technology it provides to merchants, allowing it to shut out rivals, the New York Times reported, citing two people familiar with the matter.

Spokespeople for the Department of Justice and San Francisco-based Visa didn’t immediately respond to requests for comment. Visa has long faced scrutiny from regulators and lawmakers over the fees it imposes on merchants to process debit and credit cards.

The investigation and lawsuit delves into Visa’s use of tokenization services for merchants, according to the Bloomberg and Politico news reports. That technology is deployed to protect consumer transactions by swapping card numbers for a digital token.

Visa, the largest U.S. card network, has been the target of antitrust investigations by DOJ for years now. Visa disclosed in 2021, saying in a filing with the Securities and Exchange Commission that the department had notified it of its plans to open “an investigation into Visa’s U.S. debit practices.” At that time, the card network said it was cooperating with the department and believed its business practices complied with the law.

The company has been in regulators’ and lawmakers’ cross-hairs repeatedly in recent years, including when the Justice Department sued Visa in 2020 to stop its acquisition of the digital payments technology company Plaid. In addition, Democrat Sen. Dick Durbin, who has crusaded for years to rein in Visa and Mastercard’s market dominance, has worked with Republican Sen. Roger Marshall in the past two years to pass the Credit Card Competition Act, which would require more competition for routing transaction in the credit card arena.

Durbin was instrumental in winning passage of an amendment to the 2010 Dodd-Frank Act known that imposes restrictions on fees that the bank card issuers and networks can exact from merchants who process debit cards for their customers.

Visa rival Mastercard last year settled charges also in the debit card market after the Federal Trade Commission alleged it used “illegal business tactics to force merchants to route debit card payments through its payment network.” The federal agency argued the card network had violated the 2010 Dodd-Frank Act known as the Durbin Amendment and a related implementing rule, Regulation II.

Mastercard’s settlement agreement with the FTC also imposed provisions to regulate the company’s use of tokens.

By Lynne Marek on Sep 24, 2024
Original link