Visa, the nation’s largest credit card finance company, is facing an antitrust (anti-trust) investigation from the Justice Department, the Wall Street Journal said Friday, March 19, citing people familiar with the matter.
The DOJ’s antitrust division has been gathering information to determine whether Visa has restricted merchants in the debit card market from using services offered by other, less expensive credit card companies, the sources said.
Visa is a multinational financial services company based in California, and Visa International facilitates electronic fund transfers worldwide through Visa-branded credit and debit cards. However, Visa does not issue credit cards and other services directly to consumers, but rather provides Visa-branded payment products to financial institutions around the world and allows them to offer credit, debit, prepaid and cash services to their customers.
Visa currently holds approximately 70 percent of the credit card market share across the U.S. In 2015, Visa’s global network processed more than $6.8 trillion, ranking second only to China UnionPay globally.
The U.S. Department of Commerce opened a similar investigation last November. At the Time, Visa was set to acquire a financial technology company called Plaid (Pryde). Because the company was developing a cheaper payment technology that could pose a threat to Visa’s market position. After the Commerce Department got involved, Visa dropped the deal. And now the Department of Justice has stepped in and officially launched an investigation.
The way debit card transactions are routed has been a long-standing point of contention between merchants and card companies. The regulations require merchants to choose from at least two competing services. Merchants say they often pay higher network fees to the large monopolistic companies compared to what smaller companies pay.
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