Visa Inc. and Mastercard Inc. are facing a new antitrust lawsuit that alleges the credit card companies conspired to vastly overcharge the Square payment platform, causing higher retail prices paid by consumers, according to Bloomberg.
Block Inc., the company formerly known as Square Inc., claims that Visa and Mastercard conspired to fix inflated “interchange” fees and maintain market power, according to a suit filed July 14 in the US District Court for the Eastern District of New York.
Block’s Square payment processing platform directly contracts with Visa and Mastercard to facilitate card transactions for millions of merchants. Square is the direct payer of the interchange fees, also known as swipe fees, which are charged by Visa or Mastercard and their member banks each time a customer uses a credit or debit card to make a transaction.
“The effect of these artificially inflated fees—assessed to and paid by Square—is higher retail prices paid by consumers economy-wide,” Block said in the suit. “As retail prices increase in response to inflated fees, consumers can afford less and thus purchase less, reducing output.”
Square merchants don’t pay the interchange fees, but instead pay separate fees set by the company for its payment services.
Block also accused Visa and Mastercard of raising a fee that Square directly pays based on the number of locations a merchant has.
“The fee is highly complex, difficult to calculate, and unavoidable,” Block said in the suit.
These accusations are not the first of their kind for Visa and Mastercard, as they have already been swept up in an antitrust case stemming from interchange fees in the United Kingdom.
Square is one of the companies challenging Visa and Mastercard, claiming that the fees significantly increase the cost of retail goods because the companies have dominance in the payment processing market.
Visa and Mastercard have been widely praised for their convenience, but this new suit may reveal just how much inflation may be hidden behind the swipe of a card. If the allegations prove true, it could mean both have engaged in anti-competitive behavior that results in consumers overpaying for goods and services across the economy.
Banking 4.0 – „how was the experience for you”
„So many people are coming here to Bucharest, people that I see and interact on linkedin and now I get the change to meet them in person. It was like being to the Football World Cup but this was the World Cup on linkedin in payments and open banking.”
Many more interesting quotes in the video below:
