US Accuses Visa of Illegally Blocking Competition
2024-09-29
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1The U.S. Department of Justice (DOJ) has brought a lawsuit against Visa.
2It is accusing the financial services company of using illegal methods to block competition in the debit card market.
3The lawsuit states the San Francisco-based company penalizes businesses and banks that do not use Visa's own payment processing technology.
4The DOJ argues that Visa's anti-competition methods cost individuals and businesses billions of dollars every year.
5Visa earns money for each purchase, or transaction, processed on its own network.
6The DOJ estimates about 60 percent of debit transactions in the U.S. take place on Visa's debit network.
7This adds up to more than $7 billion each year.
8In a statement, Attorney General Merrick Garland said the DOJ found that Visa had unlawfully gained enough power to charge money, or fees, "that far exceed what it could charge in a competitive market."
9Garland added that businesses and banks then pass those costs on to consumers.
10They either raise prices or reduce quality or service.
11As a result, Visa's business methods affect "not just the price of one thing - but the price of nearly everything."
12Julie Rottenberg is Visa's chief legal counsel.
13She said in a statement that the lawsuit does not consider the "ever expanding universe of companies offering new ways to pay for goods and services."
14"Today's lawsuit ignores the reality that Visa is just one of many competitors in a debit space that is growing, with entrants who are thriving," Rottenberg said.
15She added that the company would strongly defend itself against the "meritless" lawsuit.
16The lawsuit was brought in the U.S. District Court for the Southern District of New York.
17The DOJ argues that the huge number of transactions completed on Visa's network makes it difficult for businesses to use alternative companies.
18The DOJ also accuses Visa of blocking competition by paying to enter into partnership agreements with possible competitors.
19In 2020, the DOJ brought legal action to block the company's $5.3 billion purchase of financial technology startup Plaid.
20It argued the takeover was an attempt to gain control of a possible competitor to Visa.
21The purchase deal was later cancelled.
22Since the pandemic, more people worldwide have been shopping online for goods and services.
23This has led to higher earnings for Visa because of its fee structure for transactions.
24In addition, more businesses - including ones like bars, haircutters and coffee shops that mostly use cash - have started accepting credit or debit cards as a form of payment.
25Sanjay Sahrani is a financial advisor with investment company KBW based in New York City.
26He recently told investors in a note that he estimates U.S. debit revenue is at most about 10 percent of Visa's revenue.
27Sahrani said this means the lawsuit is likely to have only a limited effect on Visa's revenue as a whole.
28He also noted the lawsuit could last for years if it is not settled and goes to trial.
29Financial records show Visa processed $3.3 trillion in transactions on its network during the three months ending on June 30.
30This was an increase of 7.4 percent from a year earlier.
31U.S. payments grew by 5.1 percent, which is a lot faster than U.S. economic growth.
32I'm Bryan Lynn.
1The U.S. Department of Justice (DOJ) has brought a lawsuit against Visa. It is accusing the financial services company of using illegal methods to block competition in the debit card market. 2The lawsuit states the San Francisco-based company penalizes businesses and banks that do not use Visa's own payment processing technology. 3The DOJ argues that Visa's anti-competition methods cost individuals and businesses billions of dollars every year. Visa earns money for each purchase, or transaction, processed on its own network. 4The DOJ estimates about 60 percent of debit transactions in the U.S. take place on Visa's debit network. This adds up to more than $7 billion each year. 5In a statement, Attorney General Merrick Garland said the DOJ found that Visa had unlawfully gained enough power to charge money, or fees, "that far exceed what it could charge in a competitive market." 6Garland added that businesses and banks then pass those costs on to consumers. They either raise prices or reduce quality or service. As a result, Visa's business methods affect "not just the price of one thing - but the price of nearly everything." 7Julie Rottenberg is Visa's chief legal counsel. She said in a statement that the lawsuit does not consider the "ever expanding universe of companies offering new ways to pay for goods and services." 8"Today's lawsuit ignores the reality that Visa is just one of many competitors in a debit space that is growing, with entrants who are thriving," Rottenberg said. She added that the company would strongly defend itself against the "meritless" lawsuit. 9The lawsuit was brought in the U.S. District Court for the Southern District of New York. The DOJ argues that the huge number of transactions completed on Visa's network makes it difficult for businesses to use alternative companies. 10The DOJ also accuses Visa of blocking competition by paying to enter into partnership agreements with possible competitors. 11In 2020, the DOJ brought legal action to block the company's $5.3 billion purchase of financial technology startup Plaid. It argued the takeover was an attempt to gain control of a possible competitor to Visa. The purchase deal was later cancelled. 12Since the pandemic, more people worldwide have been shopping online for goods and services. This has led to higher earnings for Visa because of its fee structure for transactions. In addition, more businesses - including ones like bars, haircutters and coffee shops that mostly use cash - have started accepting credit or debit cards as a form of payment. 13Sanjay Sahrani is a financial advisor with investment company KBW based in New York City. He recently told investors in a note that he estimates U.S. debit revenue is at most about 10 percent of Visa's revenue. Sahrani said this means the lawsuit is likely to have only a limited effect on Visa's revenue as a whole. He also noted the lawsuit could last for years if it is not settled and goes to trial. 14Financial records show Visa processed $3.3 trillion in transactions on its network during the three months ending on June 30. This was an increase of 7.4 percent from a year earlier. U.S. payments grew by 5.1 percent, which is a lot faster than U.S. economic growth. 15I'm Bryan Lynn. 16The Associated Press reported this story. Bryan Lynn adapted the report for VOA Learning English. 17_____________________________________________ 18Words in This Story 19debit - n. money taken out of a bank account with a card 20penalize - v. to punish a person or business for breaking a law or rule 21charge -v. to create a debt in an account or to ask a price or fee 22exceed - v. to be more than a particular number or amount 23thrive - v. to grow very well, or to become very healthy or successful 24meritless - adj. without merit: good qualities that deserve praise 25alternative - n. one or two or more things you can choose between 26cash -n. physical money known as legal tender 27revenue -n. money that is paid to a business or organization