(Reuters) – Visa is currently being investigated by the Department of Justice following allegations that the payment firm charged retailers higher fees for not using its proprietary “tokenization” technology, according to sources familiar with the matter, as reported by Bloomberg News.
Shares of Visa experienced a 1.06% drop to $237.29 in premarket trading.
This investigation highlights the increasing scrutiny on payment processors and their practices, particularly when it comes to the fees they charge merchants.
The Department of Justice inquiry is focusing on Visa’s alleged imposition of higher charges for retailers who do not utilize the company’s tokenization technology.
Tokenization technology is designed to enhance security by replacing sensitive payment card data with a unique digital identifier, or token, that is difficult to replicate or misuse. This technology has gained popularity in recent years as a means to improve payment security.
By charging higher fees for retailers who do not adopt tokenization, Visa is potentially using its market dominance to steer merchants towards its own proprietary solution.
Visa is one of the largest payment processors globally, with a significant market share in the credit and debit card industry. As such, any allegations of anti-competitive behavior or unfair pricing practices by Visa are likely to draw attention from regulators and antitrust authorities.
The investigation by the Department of Justice signifies a growing concern about the power and influence of payment processors in the industry, particularly in relation to the fees they charge merchants.
Visa and other major payment processors have faced scrutiny in recent years for their fees, with some merchants arguing that the fees are excessive and unfair. This latest probe suggests that the issue of fees and pricing practices will continue to be a key focus area for regulators.
Visa has not yet released a statement regarding the investigation, and it is uncertain how long the inquiry will take or what potential repercussions may arise.
Analysts predict that the outcome of this probe could have significant implications for the payment processing industry, potentially leading to regulatory changes and increased competition.
Reporting by Pritam Biswas in Bengaluru
Credit: The Star : Tech Feed
