US Department of Justice sets antitrust sights on Visa
The US Department of Justice (DOJ) is looking into payments giant Visa over claims its practices are anticompetitive.
The department is looking into whether Visa abuses its position in the debit card market, and limited merchants’ ability to route transactions through less expensive networks.
“The US Department of Justice has informed Visa of its plans to open an investigation into Visa’s US debit practices,” Visa writes in a securities filing.
“We have received a notice to preserve relevant documents related to the investigation. “We believe Visa’s US debit practices are in compliance with applicable laws.”
Interchange fees are a pressing issue in the industry. Merchants complain that card networks can take high percentages of every transaction, in some cases up to 2%.
US industry group the Merchants Payments Coalition has welcomed the DOJ investigation.
“The MPC has been concerned about these practices to limit debit routing for years,” says spokesman Craig Shearman.
In June 2020 the UK’s Supreme Court unanimously upheld a ruling that Visa and Mastercard’s interchange fees are anti-competitive.
Retail groups in the UK have also labelled the two firms as a “duopoly” charging “excessive” card fees.
Visa in the US
In the US, Visa holds a substantial grip on the market. According to Nilsen data, 80% of Americans have at least one debit card. Of those 80%, three quarters have a Visa card.
The DOJ has set its crosshairs on card networks before. In 2010 it investigated Visa and Mastercard over the issue of anticompetitive practice in the credit card market.
It settled the matter with both firms, with Visa and Mastercard agreeing to offer consumers incentives to use low-cost credit cards.
American Express, another 2010 target, won a ruling in the US Supreme Court allowing it to stop merchants from offering users other cards.