(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 Friday.
The department’s antitrust division has been studying whether Visa limited the ability for merchants 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 research.
Visa declined to comment. The Department of Justice 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 exchange rates, which can be 2% or more of each transaction and go to the financial institutions behind it.
The industrial group Merchant Payments Coalition, which fights so-called slip rates, called the probe good news. “The MPC has been concerned for years about these practices to limit debit routing and it’s great to see how the Justice Department handles it,” said spokesman Craig Shearman. “Online transaction routing is particularly important at a time when online shopping has accelerated so rapidly during the pandemic.”
While this research is not unusual, it is occurring amid greater interest in the digital market.
Earlier this year, Visa and startup fintech Plaid called off their planned $ 5.3 billion merger following a lawsuit by the Justice Department aimed at blocking the deal on antitrust grounds. In the lawsuit, the government called Visa a “monopolist of online debit transactions.”
The Justice Department has previously investigated the credit card payments industry, but it was established with Visa and Mastercard Inc. in 2010, when they agreed to allow merchants to offer consumers incentives to use a low-cost credit card.
American Express refused to settle down. He led the battle with the Justice Department to the Supreme Court, which ruled in 2018 that it was legal for American Express to ban merchants from trying to direct consumers toward cheaper cards.
Reports from Niket Nishant to Bengaluru; Additional reports from Diane Bartz in Washington; Edited by Anil D’Silva and Matthew Lewis