Visa Under DOJ Investigation

The Justice Department is reportedly probing debit-card transaction practices.

March 22, 2021

Visa Sign in Window

ALEXANDRIA, Va.—The Department of Justice’s antitrust unit is reportedly probing whether Visa Inc. is involved in anticompetitive practices in the debit-card market, the Wall Street Journal reports, citing unnamed sources. NACS, the Merchants Payments Coalition and other merchant companies and associations have raised concerns for years that Visa and Mastercard have worked with card-issuing banks to limit merchants’ ability to do business with competing debit networks.

The DOJ has been gathering information on “whether Visa, the largest U.S. card network, has limited merchants’ ability to route debit-card transactions over card networks that are often less expensive,” the Wall Street Journal said. “Many of the department’s questions have focused on online debit-card transactions, but investigators have asked about in-store issues as well.”

The newspaper said Visa declined to comment on the report.

Convenience stores paid about $11.8 billion in credit card swipe fees in 2019, making it the second highest operating cost after labor, according to NACS State of the Industry data. NACS has battled the big card networks for years to reduce swipe fees.

“It is great to see the Justice Department investigating the anticompetitive practices of Visa,” said Lyle Beckwith, NACS senior vice president of government relations. “NACS members have been frustrated for years by the roadblocks the payment card networks and banks put in their way when they try to save a little money on card transactions. The antitrust problems with Visa and Mastercard setting swipe fees for their banks to the tune of tens of billions of dollars per year is a huge problem, but it is compounded by their stifling of competition on the fees merchants must pay to card networks.”

In addition to the Justice Department probe, payment network practices have been the subject of renewed congressional scrutiny in recent weeks. Senator Richard Durbin (D-IL) commented during a recent Senate Judiciary Committee hearing last week that swipe fees are “far in excess of any reasonable measure of cost” and that Visa and Mastercard are “so dominant in the payments market that merchants couldn’t stay in business without using their cards,” as NACS Daily reported.

And, two weeks ago, Sen. Durbin and Rep. Peter Welch (D-VT) sent Visa and Mastercard a letter asking them to cancel the April fee increases that they had planned. saying they would “undermine efforts to help the economy recover,” the letter said. The card networks last week agreed to postpone those increases until April 2022.