The US Department of Justice filed an antitrust lawsuit against Visa on Tuesday, alleging the company illegally maintains a monopoly over the use of debit cards in the United States.

According to the lawsuit, filed in a federal court in New York, Visa's practices have resulted in billions of dollars in additional fees for American consumers and businesses while slowing innovation in the debit payments ecosystem.

The lawsuit comes after a wide-ranging three-year probe by the US antitrust enforcers into Visa's business practices.

The case focuses on Visa's debit card business that allows users to only spend money from their checking account, unlike a credit card that enables purchases on borrowed funds that must be repaid later.

"While Visa is the first name many debit card users see when they take out their card to make a purchase, they do not see the role that Visa plays behind the scenes," Attorney General Merrick Garland told reporters.

"There, it controls a complex network of merchants, financial institutions and consumers" and behaves as a "monopolist" that "is charging a hidden toll on trillions of transactions," he added.

Visa, according to the lawsuit, charges roughly $8 billion in network fees on US debit volume annually. Globally, Visa processes $12.3 trillion in total payment volume.

The US government alleges that the debit card market involves younger and less affluent users, a key issue as November's presidential election approaches, with the high cost of living a major concern of voters.

"The burden of Visa's anti competitive conduct falls disproportionately on Americans who are less well off and who feel the impact of high prices most painfully," said Benjamin C. Mizer, the Principal Deputy Associate Attorney General.

To maintain its dominance, the Justice Department claims Visa imposes exclusionary agreements on merchants and banks, penalizing customers who route transactions through different networks or alternative payment systems.

It also claims that Visa sought to neutralize potential threats from technology companies and fintech startups by entering into partnership agreements rather than allowing them to compete head-on.

The officials allege Visa also imposes transaction volume commitments that effectively restrict merchants and banks from using competitors, even when those competitors offer lower prices.

Through these tactics, Visa maintains an "enormous moat" around its business, helping it earn big profits.

In a statement, Visa's General Counsel Julie Rottenberg called the legal action "meritless."

She refuted the monopoly claims, describing the debit card market as "an ever-expanding universe of companies offering new ways to pay for goods and services."

"When businesses and consumers choose Visa, it is because of our secure and reliable network, world-class fraud protection, and the value we provide," Rottenberg said.

Headquartered in San Francisco, Visa reported a global operating income of $18.8 billion and a healthy operating margin of 64 percent in 2022.

The company's North American operations boasted an 83 percent operating margin in the same year.