(Reuters) – The U.S. Department of Justice is investigating whether Visa Inc is engaging in competitive competition in the debit card market, a source familiar with the case said Friday.
According to the Wall Street Journal, which first reported the investigation, the Department of Antitrust investigated whether Visa limited the ability of merchants to conduct debit card transactions via card networks, which are often cheaper.
Visa declined to comment. The Department of Justice did not immediately respond to a request for comment.
Visa shares fell 4.7% on Friday afternoon to $ 210.27.
Traders have long complained about the high cost of network fees, or exchange rates, which can amount to 2% or more of each transaction and go to the financial institutions behind the transactions.
The business sector, the Merchants Payments Coalition, which fights so-called swipe festival, calls the sin good news. “The MPC has been concerned for years about these practices to limit debit routing, and it’s great to see the Department of Justice looking at that,” said spokesman Craig Shearman. “Tracking online transactions is especially important at a time when online shopping has accelerated so rapidly during the pandemic.”
Although such investigations are not uncommon, they come amid growing interest in the digital market.
Earlier this year, Visa and fintech firm Plaid halted their planned $ 5.3 billion merger following a lawsuit filed by the Department of Justice aimed at blocking the transaction on antitrust grounds. In the lawsuit, the government called Visa a ‘monopoly in online debit transactions’.
The Department of Justice previously investigated the credit card payment industry, but agreed with Visa and Mastercard Inc. in 2010 when they agreed to allow merchants to offer incentives to consumers to use a cheap credit card.
American Express refused to settle. It took its battle with the Department of Justice all the way to the Supreme Court, which ruled in 2018 that it was legal for American Express to ban merchants from trying to send consumers to cheaper cards.
Reporting by Niket Nishant in Bengaluru; Additional reporting by Diane Bartz in Washington; Edited by Anil D’Silva and Matthew Lewis