DOJ Probes Visa Over Alleged Anti-Competitive Debit-Card Practices: WSJ

Visa Inc V attracted a Justice Department (DOJ) probe for alleged anticompetitive practices in the debit-card market, the Wall Street Journal reports.

• The DOJ’s antitrust division probed into Visa’s possible role in restricting merchants’ ability to route debit-card transactions over cheaper card networks. The probe also inquired into in-store issues.
• The probe emphasized the network fees that merchants passed on to the customers in the form of higher prices.
• The investigation focused on Visa’s possible market domination via unlawful activities.
• The DOJ also questioned Mastercard Inc’s MA role in the debit-card marketplace and whether financial-technology firms posed competition to Visa and Mastercard.
• In November, the DOJ prosecuted Visa, alleging the perpetration of Visa’s monopoly in the online debit market via the acquisition of financial-technology firm Plaid Inc. Plaid allegedly posed a threat to Visa through the development of cheaper payment technology. Visa refuted the allegations. The companies dropped the deal in January, citing litigation complexities.
• Merchants have for years alleged the inability to route Visa or Mastercard branded online debit-card purchases over smaller networks like Shazam or NYCE, leading to higher network fees compared to the smaller networks.
• The DOJ reportedly investigated Visa’s potential manipulation of routing preference via financial incentives to banks.
• The DOJ also probed into debit-card routing practices tied to newer payment methods, including mobile wallets like Apple Pay or conventional payment terminal.
• Separately, the Federal Trade Commission was also probing Visa and Mastercard over debit-card routing.
• Price action: V shares were trading lower by 5.06% at $209.52 on the last check Friday. MA shares traded lower by 2.42% at $358.12.