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· Posted on
September 30, 2024

Visa’s anticompetitive swipe lands it in major trouble with the US Department of Justice

US Justice Department sued Visa for allegedly monopolising the debit card market illegally.

What's the key learning?

  • The US government have recently been active on cracking down big companies that are potentially monopolising its market through unethical means.
  • Aside from Visa and Google, they have been onto other companies such as Apple, LiveNation, Meta and Amazon.
  • Looking at these big companies under the government security, one would realise that the harder you cling to control, the quicker it slips through your fingers.

👉 Background: Visa is the global payments company that processed nearly $15 trillion USD in 2023. It was founded back in 1958 and has since exploded into a $532 billion US dollar business.

👉 What happened: Visa has found itself in seriously hot water with the US Justice Department and is now being sued for allegedly monopolising the debit card market. That includes:

  • Anti-competitive pricing that penalises merchants who looked for alternative payment providers
  • Paying potential competitors like Paypal, Apple, and Block, to stay out of the market

👉 What else: This illegal pricing apparently began in 2012 after the US passed new laws requiring banks to offer at least two debit networks to customers. Since then it seems Visa has been using tactics to maintain its market power.

What's the key learning?

💡When you try too hard to hold onto power, you can risk losing it all.

💡Since the US passed those laws to increase competition, Visa has been scrambling to protect its dominance ie. getting merchants to sign anti-competitive agreements and making deals with PayPal, Apple, and Block to prevent them from competing with Visa.

💡And Visa’s not the only company that’s faced legal trouble for being over-protective of its market power. Last month, Google was charged for paying $26 billion USD to companies to keep its search engine as their default.

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