Visa under scrutiny for payouts to Paypal, Square and others

Karthik Subramanian

Visa, which along with Master card is one of the largest credit card companies, is under scrutiny by the Department of Justice (DOJ) for payments that were made to Paypal, Square, and other large companies over the years.

visa

The DOJ would be looking to see whether these payments were made to ensure that these companies continued to process all their transactions through the Visa network and whether this adversely affected other smaller competition. Both Visa and Mastercard have, over the years, been very mindful of competition which has helped them to stay as the top credit card providers for more than a decade. The companies that process payments through their networks would have to pay fees for usage of their network. This fee would vary depending on the number of transactions that a company processes via the network.

Over the years, it is understood that Visa agreed for very low fees to be charged for the transactions made on its network by very large companies like Paypal, Square, and Stripe as they were known for processing huge number of transactions via the network. It is also understood that Visa made payments to these companies though the reasons for such payments are not very clear. It is also understood that the DOJ would be looking to see whether Visa prevented or discouraged the merchants from routing their debit card transactions through other rails and this is again something that is not very clear at this point and if it is indeed true, then it could come under scrutiny for anti-competition laws.

Any of the above practices are likely to have encouraged the large merchants to stick to the Visa network for clearing and these merchants would also have encouraged their users to make payments using Visa cards. Whether these practices are correct as per applicable law and standards is something that the DOJ has to decide when it does the scrutiny. Visa has been growing very strongly over the years with different practices and it has also been very quick to adapt to the changes in the card and payments industries over the years, for which it has to be given credit. It has also been one of the first major companies to support the crypto ecosystem which shows that it always has an eye for emerging trends which has helped it to stay on top of the market for a long time.

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