U.S. financial services company Visa Inc.'s debit card business - the biggest in the country - is being investigated by the U.S. Justice Department.
The department's antitrust division is determining if Visa's core business engages in anti-competitive practices, sources familiar with the matter said. It is gathering information about Visa's alleged limiting merchants from using card networks owned by competitors.
The same sources said the division is looking at Visa's online debit-card transactions. Like other networks, Visa charges merchants a network fee. This fee is invisible to customers but is lucrative for card companies. Merchants often pass on the fees to customers through increased prices.
The department said it had received reports of merchants unable to route online debit card purchases over smaller and much cheaper networks using Visa's cards. Merchants said they had been forced to pay for Visa's more expensive network fees.
Visa confirmed it was under department investigation in a regulatory filing. The company said it was cooperating. Visa said it was yet to receive a civil subpoena but it had received a notice to preserve all relevant documents.
"We believe Visa's U.S. debit practices are in compliance with applicable laws," Visa said in a statement.
The department sued Visa over its proposed acquisition of financial technology company Plaid Inc. The department said the acquisition could allow Visa to unlawfully maintain a monopoly in the online debit card market. The department said Visa controls 70% of this market.
In its lawsuit the department said Visa planned to acquire Plaid because it was developing a cheaper payment technology that would threaten its core business. Visa denied the allegations.
Visa backed out of the deal in January because of the complexity of the litigation.
