US Justice Department sues Visa

Payment systems Visa and Mastercard often face some sort of scandals around their activity. This time, in the US, Visa has been accused of unfair competition and inflating prices for its services.

According to open-source information, Visa earns more than $7 billion annually from fees on payments made through its payment cards. Additionally, payment system charges extra fees, including them in exchange rates. As a result, earnings of payment system constantly grow, as does the number of users, thanks to advertising and attractive offers.

Here, according to the US Department of Justice, the law on fair competition is being violated, as Visa does not allow other companies to compete with it, having already captured 60% of the American market. Moreover, instead of lowering fees (for loyalty, for example), they are only increased year by year. Authorities believe that the company has made country dependent on its services and is shamelessly profiting from users, with processing costs constantly rising. Merchants and banks cannot offer more favorable conditions to their clients because they are forced to pay ever-increasing fees, which also negatively affects businesses. So, it’s stated that if Visa had worthy competitors and had not achieved such market coverage, it would not have ability to raise fees and would have to lower them to attract users.

Disputes over interchange fees have previously occurred in Europe as well. In fact, both Visa and Mastercard were involved. As a result, both payment systems agreed to cape fees for several more years, keeping them at the current level.

The competition law could indeed have a qualitative impact on fees and add diversity to payment systems. At the same time, the profit of using Visa system lies precisely in its convenience and large market share. A Visa card allows you to travel and pay for all purchases with the same card. In case of a large number of different payment systems, this function would not be as accessible, which would affect international payment flows and tourism. Visa probably thinks that convenience must be paid for, but the state does not agree with this. We will continue to follow this lawsuit and keep you updated on the pages of Mono Talks.