Illustration of Visa credit and debit cards.
Credit: Reuters File Photo
The Justice Department is preparing to sue Visa, accusing the financial services giant of breaking the law to shut out rival payment processors, two people familiar with the matter said.
At the center of the lawsuit is payment processing technology, which connects a bank to a merchant whenever a purchase is made. The Justice Department plans to argue that Visa penalizes its customers when they try to use competing services to process payments, said the two people, who spoke anonymously because the lawsuit has not yet been filed.
The department may file the suit as early as Tuesday, one of the people said.
The lawsuit is the result of a sweeping investigation that dates back years. In the course of the investigation, which Visa previously disclosed, the Justice Department has conducted hundreds of interviews with parties, including retailers, grocery stores and banks, to understand Visa's agreements with financial technology firms.
It's not the first time the department has taken aim at the credit card giant. In 2020, it sued to block Visa's $5.3-billion acquisition of financial technology firm Plaid, arguing that the deal aimed to stamp out a young competitor. In that lawsuit, the Justice Department said Visa had "dominated online debit for years" and "protected its monopoly with exclusionary tactics." The companies abandoned the merger in 2021.
A spokesperson for Visa did not immediately respond to a request comment. A spokesperson for the Justice Department declined to comment.
The planned lawsuit would be the latest attempt by American officials to target corporate middlemen that they say needlessly increase fees. The Justice Department has also taken aim at real estate technology firm RealPage and Live Nation Entertainment, the parent company of Ticketmaster. The Federal Trade Commission recently sued drug middlemen over inflating insulin prices.
Those efforts are part of a broader effort by the Biden administration to tackle what it deems as anticompetitive behavior. The Justice Department and the FTC have sued Amazon, Apple, Google and Meta, the owner of Facebook and Instagram, accusing them of abusing their power and hurting competition.
The Justice Department has also successfully blocked corporate mergers like Penguin Random House's deal to acquire of Simon & Schuster and JetBlue Airways' proposed purchase of Spirit Airlines.