Department of Justice is Investigating Visa’s Fees

BUSINESS WIRE – Merchants Payments Coalition announced that the U.S. Department of Justice is investigating Visa for violating antitrust law by continuing to stifle competition in the United States’ credit- and debit card markets.

“The Department of Justice has made progress policing the payments market and the new investigation of Visa is another step in the right direction,” said Doug Kantor, counsel to the Merchants Payments Coalition, in a press release. “Visa should not be able to muscle retailers into paying up-front costs for both credit and debit transactions before they happen.”

This latest antitrust investigation comes after Congress passed legislation to improve the competitiveness among debit networks through the Durbin Amendment to the Dodd-Frank financial reform law.

The Department’s antitrust investigators are looking at how Visa runs the part of its debit card business that routes transactions to banks and a new fee the giant card company is charging, said Visa chairman and CEO Joseph Saunders in a call Wednesday with investors about the company’s fiscal second-quarter earnings.

Merchant Payments Coalition said Visa may be violating the antitrust laws and trying to avoid the competition required by the financial reform law. The new fee charged by Visa would make merchants pay for both credit and debit cards, and financially coerce merchants into accepting cards they do not want.

The fee would also undercut merchants’ competitive choice of which network to use for their transactions in violation of the financial reform law.
Visa announced earnings rose 46% during the quarter to $1.3 billion.

Under Durbin, banks now have to allow more than one company, such as Visa, to carry debit card transactions and merchants are supposed to be able to make that choice so that there is competition to keep network fees down.

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