(Reuters) – The US Department of Justice is investigating whether Visa Inc is engaged in anti-competitive practices in the debit card market, a source familiar with the matter said on Friday.
The department’s antitrust arm has investigated whether Visa has explored merchants’ ability to route debit card transactions over often cheaper card networks, according to the Wall Street Journal, which was the first to report the probe.
Visa declined to comment. Justice did not immediately respond to a request for comment.
Visa shares fell 4.7% to $ 210.27 Friday afternoon.
Traders have long complained about the high cost of network fees, or interchange fees, which can amount to 2% or more of each transaction and go to the financial institutions behind the transactions.
The industry group the Merchants Payments Coalition, which fights against so-called swipe fees, called the probe good news. “The MPC has been concerned about these practices to limit debit routing for years and it is great to see the Justice Department look into it,” said spokesman Craig Shearman. “Routing for online transactions is especially important at a time when online shopping has increased so rapidly during the pandemic.”
While such studies are not uncommon, this is due to increased interest in the digital market.
Earlier this year, Visa and fintech startup Plaid called off their planned $ 5.3 billion merger following a lawsuit by the Justice Department to block the deal on antitrust grounds. In the lawsuit, the government called Visa a “monopolist in online debit transactions.”
The Justice Department has previously investigated the credit card payment industry, but it settled with Visa and Mastercard Inc in 2010 when they agreed to allow merchants to provide incentives for consumers to use a low-cost credit card.
American Express declined to settle. It took its fight with the Justice Department 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 towards cheaper cards.
Reporting by Niket Nishant in Bengaluru; Additional reporting by Diane Bartz in Washington; Edited by Anil D’Silva and Matthew Lewis