UPDATE: March 19, 2021: In a filing Friday afternoon with the Securities and Exchange Commission (SEC), Visa confirmed the U.S. Justice Department is pursuing a probe into its debit card business.
"The U.S. Department of Justice has informed Visa of its plans to open an investigation into Visa's U.S. debit practices," the company said in an 8K filing with the SEC.
Visa said in the filing it hasn't received a civil investigative demand from the agency, which is a kind of administrative subpoena that a government authority can use to demand information from the target of an investigation. However, San Francisco area-based Visa said that it did receive a notice from DOJ "to preserve relevant documents related to the investigation."
The company added, "We believe Visa's U.S. debit practices are in compliance with applicable laws. Visa is cooperating with the Department of Justice."
- The Department of Justice (DOJ) is investigating Visa's debit card business for potential "anticompetitive practices," the Wall Street Journal reported, citing unnamed sources. The department's antitrust division is looking into whether the company has limited the networks merchants can use to process payments, thereby increasing their costs.
The Justice Department is trying to determine whether Visa has restricted merchants' use of its debit cards in such a way as to force merchants to pay higher network fees because they are unable to route their transactions over some lower fee networks, the Wall Street Journal reported. The paper said the DOJ probe is a civil investigation launched in recent weeks.
The DOJ took a swipe at Visa last year too, suing the company over its planned $5.3 billion acquisition of data aggregator Plaid. In the face of that opposition, the companies backed out of the deal in January.
The Federal Trade Commission has been investigating Visa and Mastercard over the debit card routing issue since at least 2019. In addition, Senate Majority Whip Dick Durbin (D-IL), who also chairs the Senate Judiciary committee, and Rep. Peter Welch (D-VT) sent a letter to Federal Reserve Chairman Jerome Powell last July "expressing concern over troubling debit card industry practices that are diminishing competition and costing American merchants potentially billions in excessive swipe fees," they said in a press release.
More recently, Visa and Mastercard came under pressure from Durbin and Welch over the companies' plan to increase interchange ‘swipe' fees charged when their credit cards are used for purchases. At an antitrust subcommittee hearing of the Judiciary committee this month, Durbin said: "Where is the policing authority to stop this duopoly from doing this to every merchant retailer in America." The two companies subsequently said they would postpone the fee increases that were originally planned for last year, but postponed due to the pandemic.
With the shift this year to Democratic President Joe Biden's administration, Justice could take a harsher approach to perceived antitrust violations. Earlier this month, Durbin attacked Visa and its chief rival Mastercard during a congressional hearing over antitrust concerns, citing the companies as a "duopoly."