VISA: It's Everywhere You Want to Be (Illegally?)

DOJ alleges monopoly tactics by payment processing giant

Visa charges $7 billion a year on its debit network

Photo by Rubaitul Azad on Unsplash

In the 1980s, Visa launched a pretty effective ad campaign with the tagline: Visa: It’s everywhere you want to be.

Visa ad campaign sample

The implication was simple: If you wanted to be sure your credit card was accepted, you needed to have Visa.

The company claimed other players in the space weren’t as widely accepted.

Fast forward to the mid-2020s and the issue is more intricate. The reality, though, is that Visa exercises tremendous control over the credit and debit payment processing market.

In fact, a lawsuit filed by the U.S. Department of Justice (DOJ) notes that Visa charges $7 billion for debit payment processing annually in the U.S. alone.

And, well, the DOJ believes Visa is claiming this giant market share illegally.

That’s the claim made in a new lawsuit filed against Visa alleging the use of monopoly tactics to crowd out competitors and drive up prices for consumers.

More than 60% of debit transactions in the U.S. run on Visa’s network.

“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. “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.”

Fighting Back Against Phantom Overdraft Fees

The Consumer Financial Protection Bureau (CFPB) is taking action to protect consumers from so-called “phantom” overdraft charges. These charges occur when banks assess an overdraft fee even when a customer has not opted-in to overdraft coverage.

A CFPB review found that some banks automatically opt customers in to overdraft fees without first obtaining a customer's consent. When a check is presented and the customer has insufficient funds, a bank can decline to cover the check (or debit) - if it does so, no fee is charged. However, if a bank covers the charges, the bank may then charge an overdraft fee.

This practice of default opt-in violates federal consumer protection law.

As a result, the CFPB is instructing banks to take steps to ensure they are obtaining customer consent before assessing overdraft fees.

In some cases, the CFPB found that banks make it difficult to understand whether or not overdraft fees will be charged. For example, the CFPB took action against Regions Bank for the bank’s unintelligible and manipulative processes that resulted in unexpected overdraft fees.

The guidance from the CFPB is designed to protect consumers from banks that will go to any lengths to harvest customer cash.

“The CFPB has found instances where banks have no evidence that they obtained consent for overdraft,” said CFPB Director Rohit Chopra. “No Americans should be hit with bank account fees that they never agreed to.”

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