Visa Sued by Small Businesses Over Alleged Anti-Competitive Practice

Case Overview: A class action lawsuit has been filed against Visa, alleging that the company engaged in anti-competitive practices that harmed small businesses. The plaintiffs claim that Visa's actions led to inflated processing fees and limited competition.

Consumers Affected: Small businesses that use Visa for payment processing.

Court: U.S. District Court for the Southern District of New York

Visa profits off the back of small businesses, charging billions in payment processing fees and stifling competition, a new lawsuit alleges.  

The lawsuit filed by a small business in Florida seeks to represent a class of hundreds of thousands of businesses that claim Visa's tactics have kept them locked into paying billions in processing fees. The proposed class action lawsuit adds to the growing legal pressure on Visa, following a major antitrust case recently filed by the U.S. Justice Department.

“While merchants suffer, Visa profits,” the new lawsuit said, adding that Visa’s alleged legal violations were “flagrant and willful.”

Visa Accused of Building Monopoly, Harming Small Businesses With High Fees

Florida-based All Wrapped Up Signs and Graphix filed the proposed class action lawsuit against the payments processing giant, alleging Visa has built a monopoly on debit card transactions, controlling more than 60% of the U.S. market. 

The All Wrapped Up Signs and Graphix alleges that Visa blocks competitors from entering the market by paying them off or entering agreements that prevent rivals from developing alternative payment processing networks, and in turn Visa’s practices drive up the fees small businesses pay to process transactions, ultimately costing them billions of dollars annually.

Visa charges over $7 billion in processing fees each year, the lawsuit claims, and with such high costs, small businesses feel the squeeze. By discouraging competition, Visa’s fees stay high, leaving merchants without affordable alternatives. The lawsuit argues that Visa also penalizes merchants who attempt to route payments through cheaper networks, keeping them dependent on Visa’s services.

Visa's History of Anti-Competitive Practices Under Scrutiny

Visa has been under fire for years over accusations of anti-competitive behavior, and this latest round of lawsuits isn’t the first time the company has faced scrutiny. In 2021, the Justice Department began investigating Visa’s debit card practices. Visa’s attempt to acquire financial tech company Plaid was blocked that same year, citing anti-competitive concerns. 

The company has also previously settled a class action suit in 2019, agreeing to pay $5.6 billion to U.S. merchants who accused Visa and Mastercard of inflating credit card swipe fees.

The Justice Department’s ongoing antitrust case echoes many of the claims made by the small business in this new lawsuit, particularly around Visa’s alleged tactics to discourage competitors and keep fees high.

Justice Department Lawsuit Accuses Visa of Stifling Competition

The Justice Department’s lawsuit accuses Visa of imposing a range of restrictive pricing structures that prevent competition. In its case, the government claims Visa maintains its dominance by locking merchants and consumers into its network, even going so far as to levy “staggering financial penalties” on businesses that try to use alternative services for processing debit transactions.

Visa allegedly entered into lucrative deals with potential competitors—such as PayPal, Apple, and Block (Square)—to keep them from releasing products that could challenge Visa’s stronghold on the debit market.

Antitrust Lawsuits Target Companies Across Various Industries

Visa isn’t alone in facing antitrust challenges. Consumers are trying to block a proposed merger between Capital One and Discover, arguing that the deal would reduce competition, raise prices, and limit credit card rewards. Meanwhile, ten elite U.S. colleges recently agreed to a $284 million settlement after being accused of colluding to limit financial aid to students.

Antitrust issues span across industries—from accusations that Las Vegas hotels used algorithms to fix room prices to a lawsuit claiming that major academic publishers conspired to inflate journal prices. 

In the Visa merchant antitrust proposed class action lawsuit, The All Wrapped Up Signs and Graphix are alleging violations of the Sherman Act as well as a raft of violations of state business laws. They are seeking damages, fees, and costs.

Case Details

• Lawsuit: All Wrapped Up Signs and Graphix v. Visa
• Case Number: 1:24-cv-07435
• Court: U.S. District Court for the Southern District of New York

Plaintiffs' Attorneys

• Brent W. Johnson, Benjamin D. Brown, Daniel McCuaig, Zachary Krowitz, Manuel J. Dominguez, Christopher J. Bateman, and Daniel Gifford (Cohen Milstein Sellers & Toll PLLC)

Have you experienced high transaction fees or limited payment processing options as a small business owner? Share your experiences and thoughts in the comments below.