The U.S. Department of Justice (DoJ) has filed an antitrust lawsuit against Visa, accusing the financial giant of stifling competition in the debit card market and driving up prices for consumers. Filed in the southern district of New York, the lawsuit alleges that Visa’s dominance has allowed it to impose high fees on merchants and block competitors, ultimately affecting the cost of “nearly everything” bought by American consumers.

The lawsuit claims that Visa, which processes over 60% of debit transactions in the U.S., has used its market power to impose excessive fees, known as swipe fees or interchange fees, which amount to $7 billion annually. Prosecutors allege that Visa has maintained this dominance through exclusive agreements with card issuers and merchants, making it difficult for businesses to choose lower-cost alternatives without facing what the DoJ described as “disloyalty penalties.”

Attorney General Merrick Garland emphasized that Visa’s practices harm consumers by inflating the cost of goods and services. “Merchants and banks pass along those costs to consumers, either by raising prices or reducing quality or service,” Garland said. The lawsuit is part of the Biden administration’s broader efforts to combat rising consumer prices, which have become a central issue ahead of the 2024 presidential election.

Visa has denied the allegations, describing the lawsuit as “meritless.” Julie Rottenberg, Visa’s general counsel, argued that the company operates in a highly competitive market with many payment options available to consumers. “Visa is just one of many competitors in a debit space that is growing, with entrants who are thriving,” Rottenberg said. Despite these assurances, Visa’s stock dropped nearly 5% following the lawsuit’s announcement.

The Justice Department began investigating Visa’s debit card practices in 2021, following reforms that opened the market to unaffiliated payment networks. The lawsuit seeks to restore competition by imposing regulations on Visa’s debit payment processing both online and in physical stores. This case is part of ongoing litigation against Visa and Mastercard over their market dominance, with both companies previously agreeing to a $5.6 billion settlement in 2019 to resolve claims of anticompetitive practices.

The Biden administration has made clear that promoting competition in the financial sector is a priority. Jon Donenberg, deputy director of the White House national economic council, stated, “The American economy thrives when there is real competition,” pointing to the administration’s efforts to tackle excessive fees across the financial industry.