US Department of Justice opens investigation into Visa payments

The US Justice Department is investigating Visa for what is feels may be improper relationships with large FinTech companies as part of its antitrust investigation of the company.

Antitrust investigators are looking into the financial incentives that Visa gave Square, Stripe and Paypal, the report said, citing people familiar with the matter.

To send transactions over Visa’s rails, FinTech firms pay fees that it sets, a model similar to that of other major networks.

Some FinTech companies enable payments that bypass Visa and other major card networks. For example, some allow payments to travel from one bank account to another, without using card rails.

Visa has at times offered to lower fees or give other rewards in exchange for FinTech firms sending more transactions over its rails rather than other networks or technologies.

The company said earlier in March the Justice Department was looking at its debit practices after reports that the US was investigating whether Visa uses anti-competitive practices in the debit-card market.

This is not the first time Visa has been scrutinised by the DoJ. Another investigation into a deal with the Twitter-owned Square Cash App which Visa brokered in 2015, is also underway. The app enables users to send money digitally to others.

Square was working with networks including Visa (which bought a stake in Square in 2012) and lesser-known companies to route these transactions, sources say.

Visa apparently offered to lower fees for Square to send performance payments to the company that would get bigger when Square sent more transactions over Visa. This resulted in Square using Visa for many of its Cash App transactions.

In March, the DoJ opened an investigation following allegations that Visa was embroiled in anticompetitive practices that limited merchants’ abilities to route debit card transactions over other, less costly card networks.

Currently, reports suggest there is no conclusive evidence that Visa will be found guilty of wrongdoing by the DoJ. However, it is also unlikely the investigation will end any time soon.