(Reuters) – The Justice Department is studying Visa Inc.’s debit practices, the company said Friday, after the United States investigated whether the credit card company uses anti-competitive practices in the debit card market.
“The U.S. Department of Justice has informed Visa of its plans to open an investigation into U.S. debit practices,” the company said in a securities filing. “We have received a notice to retain the relevant documents related to the investigation.”
The Justice Department is investigating whether Visa uses anti-competitive practices in the debit card market, a source familiar with the matter said Friday. The Wall Street Journal, which first reported on the news, said the antitrust division of the Justice Department was studying whether Visa was limiting the ability of merchants to send debit card transactions through card networks that often they are less expensive.
“We believe Visa’s U.S. debit practices comply with applicable laws,” the company said. “Visa collaborates with the Department of Justice.”
Shares of Visa fell sharply on Friday and plunged 6.2% to close at $ 206.90.
The Justice Department rejected the comments Friday.
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.
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 a $ 5.3 billion merger after the government sued to stop the deal and 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