Visa ‘facing US investigation’ over debit card practices
Visa is said to be facing a regulatory investigation in the US over concerns it is engaging in anti-competitive practices in the debit card market.
The US Department of Justice has been looking at whether Visa limited merchants’ ability to route transactions over card networks that are often less expensive, the Wall Street Journal reported.
The focus of the probe is on online transactions but investigators are also looking into in-store issues, according to the report.
Visa declined to comment. The Justice Department did not respond to a Reuters request for comment.
Visa’s share price dropped almost 4.5 per cent on the report.
The probe is focused on the issue of so-called network fees, which are invisible to consumers but lucrative for card companies. Merchants often pass these fees on in the form of higher prices for customers.
The new probe is also said to be examining if the payment processor’s practices are allowing it to maintain a dominant market share unlawfully.
It comes after Visa was earlier this year forced to call off its $5.3bn (£3.8bn) merger with fintech startup Plaid after the Justice Department filed a lawsuit aimed at blocking the deal on antitrust grounds.
Authorities argued the tie-up would “eliminate a nascent competitive threat” to Visa, which it described as a “monopolist in online debit transactions”.
Earlier this week it emerged Visa was planning to hike fees on purchases made by UK-based customers from most of Europe.
The payments giant is preparing to inform its 4,000 clients that the interchange fees will be hiked to 1.5 per cent — a fivefold increase — for online credit card payments, Sky News reported.