DoJ launches on possible abuse of VISA monopoly
The US Department of Justice has opened an investigation into possible distortions of competition by credit card company Visa. Prosecutors suspect that the company has made it extra difficult for retailers to make card payments via networks other than Visa’s, reports news agency Bloomberg and The Wall Street Journal on the basis of insiders.
A law introduced in 2010 requires retailers in the United States to have a choice of at least two payment networks that process transactions per card. The idea is that entrepreneurs can also opt for cheaper networks than those of the large credit card companies. This law came after years of complaints from entrepreneurs that they were unnecessarily expensive with fees for credit card companies, which were often passed on to the consumer. The new investigation by the US Justice Department would now focus more on online card payments, although problems in physical stores are also being looked at.
The Ministry of Justice filed a lawsuit against Visa last year to stop the multi-billion dollar takeover of payment processor Plaid. The merger, with which Visa wanted to swallow an overly dangerous competitor, was eventually cancelled.
Prosecutors stated in that lawsuit that Visa already had 70 percent of all digital card payments in the US through the company’s networks. Visa accused the authorities of modifying the definition of the online card payment market in such a way that the company’s power seemed excessive.