NEW YORK (AP) — The U.S. Justice Department has filed an antitrust lawsuit against Visa, alleging that the financial services behemoth uses its size and dominance to stifle competition in the debit card market, costing consumers and businesses billions of dollars.
The complaint filed Tuesday says Visa penalizes merchants and banks who don't use Visa's own payment processing technology to process debit transactions, even though alternatives exist. Visa earns an incremental fee from every transaction processed on its network.
According to the DOJ's complaint, 60% of debit transactions in the United States run on Visa’s debit network, allowing it to charge over $7 billion in fees each year for processing those transactions.
“We allege that Visa has unlawfully amassed the power to extract fees that far exceed what it could charge in a competitive market,” said Attorney General Merrick B. Garland in a statement. “Merchants and banks pass along those costs to consumers, either by raising prices or reducing quality or service. As a result, Visa’s unlawful conduct affects not just the price of one thing – but the price of nearly everything.”
The Biden administration has aggressively gone after U.S. companies that it says act like middlemen, such as Ticketmaster parent Live Nation and the real estate software company RealPage, accusing them of burdening Americans with nonsensical fees and anticompetitive behavior. The administration has also brought charges of monopolistic behavior against technology giants such as Apple and Google.
According to the DOJ complaint, filed in the U.S. District Court for the Southern District of New York, Visa leverages the vast number of transactions on its network to impose volume commitments on merchants and their banks, as well as on financial institutions that issue debit cards. That makes it difficult for merchants to use alternatives, such as lower-cost or smaller payment processors, instead of Visa’s payment processing technology, without incurring what DOJ described as “disloyalty penalties” from Visa.
The DOJ said Visa also stifled competition by paying to enter into partnership agreements with potential competitors.
In 2020, the DOJ sued to block the company’s $5.3 billion purchase of financial technology startup Plaid, calling it a monopolistic takeover of a potential competitor to Visa’s ubiquitous payments network. That acquisition was eventually later called off.
Visa previously disclosed the Justice Department was investigating the company in 2021, saying in a regulatory filing it was cooperating with a DOJ investigation into its debit practices.
Since the pandemic, more consumers globally have been shopping online for goods and services, which has translated into more revenue for Visa in the form of fees. Even traditionally cash-heavy businesses like bars, barbers and coffee shops have started accepting credit or debit cards as a form of payment, often via smartphones.
KBW analyst Sanjay Sahrani said in a note to investors that he estimates that U.S. debit revenue is likely at most about 10% of Visa revenue.
“Some subset of that may be lost if there is a financial impact,” he said. Visa’s “U.S. consumer payments business is the slowest growing piece of the aggregate business, and to the extent its contribution is affected, it is likely to have a very limited impact on revenue growth.”
He added the lawsuit could stretch out for years if it isn’t settled and goes to trial.
Visa processed $3.325 trillion in transactions on its network during the quarter ended June 30, up 7.4% from a year earlier. U.S. payments grew by 5.1%, which is faster than U.S. economic growth.
Visa, based in San Francisco, did not immediately have a comment. Visa shares fell $13.53, or 4.7%, to $275.10 in afternoon trading.
An Apple credit card is shown with a Visa debit card in a photo taken in New York on Tuesday, Sept. 24, 2024. (AP Photo/Peter Morgan)
FILE - A Visa card is displayed on May 15, 2024, in Portland, Ore. (AP Photo/Jenny Kane, File)
WASHINGTON (AP) — Retired NFL quarterback Brett Favre has been diagnosed with Parkinson’s disease, he told a congressional committee Tuesday.
Favre made the disclosure as part of his testimony about a welfare misspending scandal in Mississippi. Favre, who does not face criminal charges, has repaid just over $1 million in speaking fees funded by a welfare program in the state and was also an investor in a biotech company with ties to the case. The biotech firm has said it was developing concussion treatments.
The former football star, 54, told the committee that he lost his investment in the company that he thought “was developing a breakthrough concussion drug I thought would help others.”
“As I’m sure you’ll understand, while it’s too late for me — I’ve recently been diagnosed with Parkinson’s — this is also a cause dear to my heart,” Favre said.
What causes Parkinson's disease is unknown, and it is unclear if Favre's disease is connected to his football career or head injuries. He said on a radio show in 2022 that he estimates he may have experienced “thousands” of concussions in his two decades in the NFL.
According to the Parkinson's Foundation, scientists believe that the disease is caused by a combination of genetic and environmental factors, and those environmental factors “may include head injuries, pesticide exposure or area of residence.”
Favre “is one of the 90,000 people in the U.S. who will be diagnosed with PD this year alone,” said Parkinson's Foundation CEO John Lehr.
In the 2022 interview, Favre said he initially thought the number of concussions he had received playing football was low, but realized it could be much higher once he learned more about them, including that they can happen without causing someone to lose consciousness.
During one 2004 game, Favre sustained a concussion but returned after sitting out only two plays and threw a touchdown pass without having been cleared to return to action.
The Super Bowl-winning quarterback appeared at the Republican-led House Ways and Means Committee hearing to advocate reform of the federal welfare system to better prevent fraud.
“The challenges my family and I have faced over the last three years — because certain government officials in Mississippi failed to protect federal TANF funds from fraud and abuse, and are unjustifiably trying to blame me, those challenges have hurt my good name and are worse than anything I faced in football,” Favre said.
House Republicans have said the scandal in Mississippi points to the need for an overhaul in the federal Temporary Assistance for Needy Families program. Favre says he provided services to the nonprofit that paid him with state funds, but the state auditor has said Favre did not show up for the speaking engagements.
Favre has said he didn’t know the payments he received came from welfare funds and has noted his charity had provided millions of dollars to poor kids in his home state of Mississippi and in Wisconsin, where he played most of his career with the Green Bay Packers.
Favre was known for his durability during his Hall of Fame career. He had an NFL-record streak of 297 consecutive starts, a figure that goes up to 321 if playoff games are included.
He won three straight MVP awards with the Green Bay Packers from 1995-97. Favre led the 1996 Packers to their first Super Bowl title in nearly three decades and brought them back to the Super Bowl the following year.
Favre was with Green Bay from 1992-2007 and also played for the Atlanta Falcons (1991), New York Jets (2008) and Minnesota Vikings (2009-10). At the time of his retirement in 2011, Favre owned multiple NFL career passing records. He was inducted into the Pro Football Hall of Fame in 2016.
Megargee contributed from Milwaukee, Wisconsin.
Former NFL quarterback Brett Favre, left, arrives to appear before the House Committee on Ways and Means on Capitol Hill, Tuesday, Sept. 24, 2024, in Washington. (AP Photo/Mark Schiefelbein)
Former NFL quarterback Brett Favre arrives to appear before the House Committee on Ways and Means on Capitol Hill, Tuesday, Sept. 24, 2024, in Washington. (AP Photo/Mark Schiefelbein)
Former NFL quarterback Brett Favre appears before the House Committee on Ways and Means on Capitol Hill, Tuesday, Sept. 24, 2024, in Washington. (AP Photo/Mark Schiefelbein)
Former NFL quarterback Brett Favre appears before the House Committee on Ways and Means on Capitol Hill, Tuesday, Sept. 24, 2024, in Washington. (AP Photo/Mark Schiefelbein)
Retired NFL quarterback Brett Favre says he has Parkinson's disease
Retired NFL quarterback Brett Favre says he has Parkinson's disease
FILE - Retired NFL quarterback Brett Favre participates in a question and answer session at a fundraiser for Willowood Developmental Center, a facility that provides training and assistance for special needs students, Wednesday, Oct. 17, 2018 in Jackson, Miss. (AP Photo/Rogelio V. Solis, File)
