(Reuters) – The U.S. Department of Justice is investigating whether Visa Inc is involved in anti-competitive practices in the debit card market, a source familiar with the matter said on Friday.
The department’s antitrust division is investigating whether Visa has limited merchants’ ability to route debit card transactions on card networks that are often cheaper, according to the Wall Street Journal, which was the first to report the investigation.
Visa declined to comment. The Justice Department did not immediately respond to a request for comment.
Visa shares fell 4.7% to $ 210.27 on Friday afternoon.
Traders 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 the financial institutions behind the transactions.
The industry group Merchants Payments Coalition, which fights so-called theft rates, called the investigation good news. “MPC has been concerned with these practices to limit debt routing for years and it is great to see the Justice Department taking care of this,” said spokesman Craig Shearman. “Routing for online transactions is particularly important at a time when online shopping has accelerated so quickly during the pandemic.”
Although such investigations are not uncommon, it comes amid increased interest in the digital market.
Earlier this year, Visa and fintech startup Plaid canceled their planned $ 5.3 billion merger after a Justice Department action aimed at blocking the deal for antitrust reasons. In the process, the government called Visa a “monopolist in online debit transactions”.
The Justice Department previously investigated the credit card payments industry, but made 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 make a deal. The battle with the Department of Justice came to the Supreme Court, which ruled in 2018 that it was legal for American Express to prohibit merchants from trying to direct consumers to cheaper cards.
Niket Nishant’s report in Bengaluru; Additional reporting by Diane Bartz in Washington; Editing by Anil D’Silva and Matthew Lewis