The Justice Department is investigating whether he has a visa Inc.
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According to people familiar with the matter, the debit-card market is involved in anti-competitive practices.
People say the department’s antitrust department collects information and asks if the largest network of US cards, Visa, which is always less expensive, has limited access to debit-card transactions on card networks. Many of the department’s questions focused on online debit-card transactions, but investigators also asked about in-store issues, people said.
The probe highlights the important role of so-called network fees that are invisible to customers, profitable for card companies, but weigh on merchants, who often pass on fees to customers in the form of higher prices.
This is because anti-trust implementers on the administration of the Department of Justice have focused on investigating digital-marketplace activities, including the financial sector, and examining the practical practices of dominant companies.
In a new probe, the department is considering whether visa methods allow it to illegally maintain a strong market share.
A Visa spokesman declined to comment. The Justice Department did not immediately return a request for comment.
Some said anti-trust investigators only asked questions in addition to the issue of debit-card routing. The department has also asked about MasterCard Inc.
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The role of placement in the debit-card market, and whether financial-tech companies are real competitors to Visa and MasterCard, one source said.
A MasterCard spokesperson did not comment.
The new civil investigation, launched in recent weeks, is funded by Visa through financial-technology company Plaid Inc. People said following an investigation by the department of the proposed acquisition of. The department sued Visa over the plaid deal in November, alleging that the acquisition would allow Visa to illegally maintain a monopoly on deb online debit, where the department said it has about 70 percent market share.
Plaid was developing an innovative, inexpensive payment technology that could be risky for visas, the government alleges. Visa misled the lawsuit by saying that Plaid was not in fact a competitor.
The companies dropped the deal in January, citing the potential length and complexity of the lawsuits.
How debit-card transactions are routed is a dispute between merchants and card companies. The Durbin Reform, 2010 is part of the Dodd-Frank Act, which requires merchants to have the option to select a route transaction from at least two non-performing debit-card networks.
Merchants have been alleging for years that when the name of Visa or MasterCard is next to the card, they are always unable to route deb debit-card purchases on smaller networks, such as Shazam or NYCE. Merchants say that as a result, they often end up paying higher network fees than what they would pay to lesser known networks.
According to one of the people familiar with the matter, the Department of Justice is seeking information about the financial incentives that Visa gives to banks issuing cards on its network. It is looking at whether those incentives encourage banks not to enable routing on other networks, the person said.
The DOJ has also asked about debit-card routing practices tied to new payment methods, one person said. This includes debit cards when used with mobile wallets like wal pal pay and separately when customers in the store pay by tapping the debit card instead of entering at the payment terminals.
Separately, the Federal Trade Commission is investigating Visa and MasterCard regarding debit-card routing. Sen. Richard Durbin and Rep. Peter Welch also raised the issue in a letter to the Federal Reserve last summer.
Write to Annamaria Andreotis at [email protected] and Brent Kendall at [email protected]
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