Visa Inc. faces fresh scrutiny from the US Department of Justice

Visa Inc. is under fresh scrutiny by the US Department of Justice (DOJ) over allegations that it expects retailers who don’t use its proprietary tokenization technology to pay more. As such, the Justice Department is seeking comprehensive information on how the payments giant charges merchants for the technology meant to protect cardholder details.

Visa on DOJ’s radar

Visa introduced its proprietary tokenization technology in 2014 with the intent of protecting cardholder information. To do so, it replaced the 16-digit account number with a token that can only be unlocked by the company. Notably, merchants who use this technology enjoy lower prices.

In particular, retailers who use the technology are expected to pay card fees worth $1.28 for every $100 in purchases on the traditional Visa card. In comparison, a merchant is expected to pay $1.38 if they don’t use the technology.

This disparity is the basis of the fresh scrutiny of Visa’s policies. Notably, it comes just a few months after its key competitor, Mastercard faced a comparable case.

Two years ago, the DOJ’s antitrust division held investigations on whether Visa had restricted the merchants’ ability to send debit transactions via less costly networks.

In October 2022, the US Federal Trade Commission commenced an investigation on whether Mastercard and Visa’s security tokens restrict debit-card routing competition on particular digital payments. As indicated by Visa, DOJ’s antitrust division asked the company to provide it with additional documents on its debit card practices within the US. This included information on its competition with other payment networks. Mastercard was also required to avail additional information to the DOJ.