Visa’s stock price fell on Friday as the card giant confirmed that the FBI is investigating whether it has used anti-competitive practices to maintain its dominance in the debit card market.
Shares in the payment processor fell 6.2 percent to $ 206.90 after the Wall Street Journal reported that the US Department of Justice’s antitrust division is targeting the company.
Investigators are investigating whether Visa is improperly blocking merchants from routing debit card transactions through rival payment networks that often charge lower fees, the paper said, citing unnamed people familiar with the case.
In a regulatory filing on Friday afternoon, Visa confirmed that it is working with the DOJ, which has ordered it to “retain relevant documents pertaining to the investigation,” adding, “We believe that Visa’s US debt collection practices are consistent with applicable legislation.”
The FBI is reportedly weighing up whether Visa is using illegal tactics to keep a grip on an industry that is raking in billions of dollars in fees per year.
Visa’s total payment volume in 2019 was $ 8.9 trillion, according to its latest annual report – nearly twice as much as Mastercard, the second-largest player in the market.
Merchants accepting ATM purchases have reportedly complained for years that they often cannot use smaller networks, such as NYCE or Shazam, when a card is named Visa or Mastercard.
That often forces companies to pay higher transaction fees than they would if they could use other options, the Journal reported.
Federal researchers investigating the issue have largely asked questions about online debit card payments, although they have also raised questions about issues with in-store transactions, the report said.
They are also looking for information about the financial incentives Visa gives to banks that issue cards on its network and whether those incentives encourage banks not to pass payments through other networks, a source told the Journal.
The Justice Department declined to comment on Friday.
News of the probe comes less than two months after Visa closed its $ 5.3 billion acquisition of financial technology startup Plaid amid antitrust investigations.
The companies decided to drop the deal rather than challenge a lawsuit filed by the Justice Department to block the merger as Visa was trying to destroy an emerging rival.
About 200 million bank accounts are said to be connected to Plaid’s technology, which allows developers to collect data on consumer spending. The FBI said Plaid planned to build a payment network that could have competed with Visa by allowing consumers to pay merchants directly from their bank accounts.
Visa CEO Al Kelly viewed the acquisition of Plaid as an “insurance policy” to protect the company’s US debit business, the DOJ claimed. Visa disputed the FBI’s argument, saying that Plaid was, in fact, not a competitor.