Visa Ordered to Reform Credit Information System by Japan's Antitrust Watchdog

Visa has been instructed by Japan's antitrust watchdog to reform its business practices after being found to restrict and pressure card issuers to use its credit information system. This marks the first administrative action taken against a credit card company in Japan. Visa's Singaporean unit, which manages the Asia-Pacific region, was found to charge higher fees to other credit card companies that did not use its network to check credit information.

Japan’s antitrust regulator, the Japan Fair Trade Commission (JFTC), has concluded its investigation into Visa Worldwide, accepting the company’s remedial commitments over alleged anti-competitive practices in the credit card market. This marks the first time the JFTC has taken legal action against a leading global credit card brand [1].

The probe focused on allegations that Visa’s Singaporean arm, which handles its Japanese business, unfairly steered Japanese companies toward its card authorization system over a rival’s through a subtle rule change in the complex network of credit card transactions. The JFTC found that Visa charged higher fees to other credit card companies that did not use its network to check credit information [1].

In response to the investigation, Visa has committed to reforms aimed at addressing these practices. The specifics of these reforms are not yet publicly disclosed, but the JFTC has closed the probe after accepting Visa’s commitments. This development is significant as it sets a precedent for future antitrust actions against major global financial institutions operating in Japan [1].

Separately, Visa faces regulatory scrutiny in New Zealand, where the Commerce Commission has reduced interchange fees paid by businesses to accept Visa and Mastercard payments. The regulator has decided not to regulate the fees for commercial credit card or prepaid debit card payments at this time [3]. This decision aims to cut costs for businesses and consumers, with the commission estimating that the average business could save around $500 each year in lower fees [3].

The latest developments underscore the ongoing regulatory focus on fair competition in the financial services sector. As Visa and other major financial institutions navigate these regulatory challenges, they must adapt their business practices to comply with antitrust laws and ensure fair treatment for all market participants [1, 3].

References:
[1] https://www.mlex.com/mlex/antitrust/articles/2367521/japan-closes-antitrust-probe-into-visa-after-company-commits-to-reforms?editor_picks=1
[3] https://www.nbr.co.nz/finance/comcom-applies-more-limits-on-visa-mastercard-interchange-fees/