US Department of Justice Investigating Visa for Debit Card Practices: Source


(Reuters) – The US Justice Department is investigating whether Visa Inc engages in anti-competitive practices in the debit card market, a source familiar with the matter said on Friday.

The department’s antitrust division has been investigating whether Visa limited merchants’ ability to route debit card transactions through card networks that are often less expensive, according to the Wall Street Journal, which was the first to report on the research.

Visa declined to comment. The Justice Department did not immediately respond to a request for comment.

Shares of Visa fell 4.7% to $ 210.27 on Friday afternoon.

Merchants have long complained about the high cost of network fees, or interchange fees, which can be 2% or more of each transaction and go to financial institutions behind the transactions.

The industry group Merchants Payments Coalition, which fights against so-called slippage fees, called the investigation good news. “The MPC has been concerned about these practices to limit debit routing for years and it’s great to see that the Justice Department is looking into it,” said spokesman Craig Shearman. “Routing for online transactions is particularly important at a time when online shopping has accelerated so rapidly during the pandemic.”

While this research is not unusual, it comes amid increased interest in the digital marketplace.

Earlier this year, Visa and fintech startup Plaid canceled their planned $ 5.3 billion merger following a Justice Department lawsuit aimed at blocking the deal on antitrust grounds. In the lawsuit, the government called Visa a “monopolist in online debit transactions.”

The Justice Department has previously investigated the credit card payments industry, but struck a deal with Visa and Mastercard Inc in 2010 when they agreed to allow merchants to offer incentives to consumers to use a low-cost credit card.

American Express refused to settle. He took his battle with the Justice Department all the way to the Supreme Court, which ruled in 2018 that it was legal for American Express to ban merchants from trying to steer consumers toward cheaper cards.

Report of Niket Nishant in Bengaluru; Additional reporting from Diane Bartz in Washington; Editing by Anil D’Silva and Matthew Lewis

.

Source link