Justice Department Probing Visa Over Debit-Card Practices

The U.S. Department of Justice is investigating whether Visa is engaging in anticompetitive practices in the debit-card market, the Wall Street Journal reported on Friday, citing people familiar with the matter. From a report: The department's antitrust division has been probing if Visa limited merchants' ability to route debit-card transactions over card networks that are often less expensive, the WSJ reported. Many of the department's questions are focused on online debit-card transactions, but investigators are looking into in-store issues as well, according to the report. Earlier this year, Visa and fintech startup Plaid called off their $5.3 billion merger following a lawsuit from the Justice Department aimed at blocking the deal on antitrust grounds.

Hopefully

[DarkRookie2]

It is an unfriendly probing.

Re:

[account_deleted]

Comment removed based on user account deletion

debit cards suck

[Anonymous Coward]

You pay a proportionally exorbitant fee at the machine. You pay an additional per transaction fee if you are out of network. And most banks charge you a monthly fee if you use any out of network ATMs.

We should regulate these transactions. And bring in nationalize standards for consumer banking, even if that means we have to create a new Postal banking service to operate as a model and provide competition.

Re:

[Arthur, KBE]

Yeah, I don't see any technical reason why these transactions are any more expensive than a credit card transaction, other than there is an additional step of communicating with a bank - but this isn't 1990 anymore, and telecommunications are cheap and ubiquitous. This is purely a symptom of entrenched cartels extracting feed simply because nobody with a backbone as challenged these entities yet.

Re:

[anoncoward69]

I don't know what debit card you use, but mine doesn't have any extra fees. Yeah you're going to get fees at non-bank or out of network ATMs, but that's a "convenience" fee. You could have just driven to one of your bank's ATMs instead. It wasn't that long ago that the cards were issues by the banks themselves and ONLY worked in their own ATMs

Re:

[Arthur, KBE]

OK, it's a "convenience fee". I think the question is, what exactly is the justification for this fee when the telecoms have only lowered their prices during the time these systems have been available?

Re:

[Cigamit]

For ATMs, its pretty easy to justify why there is a fee. Someone had to drive around with an armor car getting 8 MPG with a stack of cash to fill that thing up. For most bank's own ATMs, they eat the cost of that as the price of doing business (some banks don't). Other banks charge your bank a fee for pulling their cash that they paid someone to fill and your bank may pass this on to you. This all makes sense (unless your bank is charging you a fee on top of the ATM fee). The transaction fees on electro

Re:

[Arthur, KBE]

It's not strictly an ATM fee - that would be understandable. The companies that charge this ATM fee for debit, also charge the SAME fee, if you use this debit card for online purchases or other transactions that don't involve the transfer of cash.

Re:

[Cigamit]

Yes, and that is the transaction fee that I mentioned, the rest is talking about physical ATMs (same as the parent of your reply). If your bank does that, I would drop said bank. I know mine doesn't, but then again I rarely use debit cards for online purchases as there is a major lack of protects like there are with credit cards.

Re:

[Bradac_55]

This isn't about people that have good credit and a regular bank. This is about the people called "under-banked" who are fico 500 or less that a normal sane bank wouldn't touch. Even some low 600's use them regularly.

I worked shortly at a pay day lender umbrella company to build a vm/citrix farm. I was shocked at how many people actually use them as a regular bank to "deposit" paper checks and pay there loans. They issue a 3rd party debit card with all kinds of transaction fees (monthly, intake, outtake

Re:

[Mononymous]

This isn't about people that have good credit and a regular bank. This is about the people called "under-banked" who are fico 500 or less that a normal sane bank wouldn't touch. Even some low 600's use them regularly.

I don't know why you're bringing credit scores into a discussion about debit cards. You know, the cards with which you spend money that's already deposited into your checking account. Borrowing has nothing to do with it.

And who goes to the bank to open a checking account and gets turned down for poor credit? A loan, sure, but a checking account?

Re:

[Bradac_55]

You obviously haven't had much experience in the banking industry. I can guarantee any bank/credit union that open's a savings/checking account for a customer pulls a SP (Soft Pull) on at least Fico8 if not Fico9 before giving them an account it's all automated at the desk during the process. Even a checking account has to be insured on the back-end for accounting purposes.

Try going into a bank with a sub-600 score and see if you can open anything easily. Not to mention the fact that those people will no

Re:debit cards suck

[Fly Swatter]

Cards in general suck, agreements with merchants do not allow the transaction fee to be listed as a line item on card purchases - so merchants must build the transaction cost into all prices. Cash payers are left with those higher prices - how is that not anti-competitive? We cash payers are also footing the bill for these transactions.

Re:

[SteelCamel]

Cash isn't free for the merchant either. You need change - which the bank will charge you for. You need to keep the cash secure - secure cash drawers, a safe, cameras and alarms to deter robbers (and insurance for when they're not deterred). And you need a security van to take the cash away, and someone to count and bank it. There's a good reason some businesses have been looking at going card-only.

Re:

[Fly Swatter]

This is a tired argument as most merchants still handle cash daily - so give me a break. I want card users to see how much it is actually costing them and for cash payers to not also subsidize the activity. Is that too much to ask?

Re:

[cdwiegand]

And most merchants handle cards, too. You didn't cite sources for if handling cash is cheaper or more expensive for the merchant than processing debit and/or credit transactions.

And in some states, merchants can offer a discount/lower price for paying in cash. Colorado did this a couple years ago, and doesn't seem to have ended the world.

Re:

[renegade600]

just go to a merchant that will give cash back. That is what I do when I need cash and there are no fees. Mostly use mobile payments anyway so cash not needed for most transactions.

Re:

[eepok]

This is not a debit card issue. It's 100% an issue with who you choose to hold your money. If you're with one of the super-mega banks like Bank of America or Wells Fargo, ya, they'll nickle and dime you wherever possible. They have to make money for their investors.

If you're with a half-decent credit union, you don't get any of these fees and chances are you can use 30,000 ATMs nationwide with the Co-Op network-- free of charge. https://www.co-opfs.org/Shared... [co-opfs.org]

Re:

[inode_buddha]

This is not a debit card issue. It's 100% an issue with who you choose to hold your money. If you're with one of the super-mega banks like Bank of America or Wells Fargo, ya, they'll nickle and dime you wherever possible. They have to make money for their investors.

That's what interest is for. Banks are making the difference between the prime rate, and their lending rate. If they can't stay in business on that basis alone, then they are business FAILURES.

Floating stock in a bank is an abomination of greed, just like card fees are.

Re:

[DarkOx]

You really should switch banks.

Not only does my bank NOT charge any ATM fees they'll reimburse you up to $6 a month for fees the ATM operators charge.

Granted they pay very little interest on a checking accounts and not much better on savings accounts but last I looked around a few months ago, pretty much everyone else has dropped their rates to damn near zero too on most types of accounts.

Re:

[jonadab]

My mom's bank issues cards that can be processed by vendors as credit cards (i.e., when the cashier asks if you want to do debit or credit, you say "credit"), but work like debit on the bank's end (withdraws from your checking account). But this is a small-town bank that doesn't have to answer to an enormous international body of corporate stock holders. (I think they have a total of eight branches including loan offices and drive-through-only locations; the headquarters is in a city of ten thousand peopl

Either good or donations will come of it, which?

[Somervillain]

I see 2 possible scenarios:
1. The Justice Department is doing something good and actually regulating big banks for a change
2. Visa is about to increase their political donations and lobbying and nothing will have a hope of passing

Oh yeah, and since Biden is associated with it, Fox News and the RNC will call it socialism, marxism, terrorism, genocide of jobs, link it to the "squad" for no reason, etc.

It's donations

[rsilvergun]

Walmart, Target, Walgreens and other big retailers lobby hard for this.

It's neither good or bad, it's a fight between mega corps. The savings will not be passed onto consumers in any appreciable fashion. For that to happen the DOJ needs to go after the constant stream of Mergers & Acquisitions, and there's zero political will to do that.

There's more to this than fees

[rickb928]

Try reloading a 'prepaid' card with your debit card. Many prepaids don't allow loads from debit cards, some charge pretty substantial fees. Prepaid cards are aimed, mostly at the 'unbanked', and intend to give these 'unbanked' a simple and manageable solution to various purchasing problems, especially online purchasing. But they miss the real reason so many are 'unbanked', they just have lifestyles and make choices that do not work within traditional banking. It costs, but that's another discussion.

Look out for how this blossoms into examining restrictions on debit use v. ACH or checking use. A debit card access your checking account, usually, and as such is a virtual immediate check. Why do prepaid cards so often refuse debit loads? Network fees. They want all the fees for themselves, and when your bank/network charges them, they are reluctant to pass that along, possibly because it exposes the real fees they want to charge.

Only any specific regulations, restrictions, or costs associated with fraud protection could justify debit fees so much in excess of credit fees - except that debit cards have no interest revenue. Gotta make the buck somehow. That's the crux. No interest, no revenue.

Re:

[anoncoward69]

The problem isn't the access, it's that there are people who have used prior bank accounts irresponsibly, drawing negative balances, constantly bouncing checks that banks close their account, put them in a registry and no other bank will touch them. Unfortunately the issue is all the fault of the person for not being responsible. Once someone is in this boat they have no option but to use pay day loan check cashing places to cash their check at a 1%-3% fee and then walk out with the cash and just pay cash

Re:

[anoncoward69]

This is why prepaid cards work for the "unbanked" because the balances are held at MasterCard/Visa themselves, they can instantly verify the amount on the card and instantly debit it. There are no transactions in flight for hours/days while it works its way though the card processors to the banks,

Re:

[sjames]

Of course irresponsible is relative. Have you ever tried to get assurances from a bank that a deposit from a check is FINAL? That is, it's in your account and cannot be clawed back? You can't do it. They will not make such an assurance.

Then, if/when they DO claw a deposit back, they will happily bounce checks you wrote against that deposit and charge you hefty fees for doing so, pulling your balance down further, causing more checks to bounce. Banks have even been known to structure processing in order to m

Re:

[anoncoward69]

Well this isn't much of a problem for people getting pay checks from legitimate businesses. If you're dealing with shady people whose checks might bounce. you might want to just think about that money doesn't exist for 2 weeks and keep enough float cash in the account or on hand to get you through that time.

Re:

[anoncoward69]

Always good to keep at least a month of living expenses in your checking. If you ever quit or get fired, you know youre good for a month to either find another, get the unemplyment cash flow coming which can take about 2-3 weeks or liquidate other assets to replenish the acct.

Re:

[sjames]

Certainly I do that and presumably you do, but some people are stuck living paycheck to paycheck. Sometimes the "shady people" they deal with are mid to large companies that get defrauded by an outsourced payroll company. We even saw a case here on /. where an outsource payroll company clawed back multiple months of paychecks from people. How much slush do you expect people to maintain? A remarkable number of small employers really suck at accounting. It's not exactly shady since no fraud was intended and

Re:

[Anubis IV]

There's no reason at all, to be "unbanked" if you don't want to.

Even if that were true—which it isn't, to be clear—what of it? Why should people be compelled to put their money in banks if they don't want to? Whatever their reasons, "not wanting to bank" is a valid life choice and something that should be both permissible and supported, in much the same way that cash remains an option despite much of the world having switched to credit cards and the like. The fact that you and I bank doesn't mean everyone else should as well. The fact that you and I may use

Re:

[Arthur, KBE]

I agree 100% with what you're saying. I'd love to say FU to the banks and pay everything in cash, or crypto, or Ron Paul Coin or whatever. But the initial complaint in the GP's post, if I understood it correctly, was dealing with people who *can't access*, or *don't have access* to banking - and I that's what I disagree with. In the US, at least, the most down-trodden person, if they want to be "banked", can walk into a Wal-Mart and open a checking account.

Re:

[Anubis IV]

Between people who are physically incapable of leaving their homes, people who can't afford gas or public transportation, and people who simply can't spare the time to open/manage an account in between their other obligations, I disagree that everyone has access to banking. Sure, some Walmarts have banks, but not all of them. Sure, there are plenty of decent, online banks that operate as you described, but the banks these sorts of people tend to find within walking distance are the types that charge ATM and

Re:

[Arthur, KBE]

Then what's the solution? Bank tellers canvasing neighborhoods door-to-door to solicit business? Somehow, I think, the same people complaining about the unbanked would also find this practice to be exploitative and objectionable.

At some point, people have to be adults - and that applies equally to able persons in the community to assist those that legitimately can't get access to finance.

Re:

[Anubis IV]

Then what's the solution?

Prepaid cards. That's, I think, what the OP was complaining about. Prepaid cards can be picked up at practically any grocery or convenience store and give those people nearly all of the convenience that comes from having a credit or debit card. The OP was suggesting that prepaid cards are in some ways rigged to discourage various behaviors that should be permissible.

Re: There's more to this than fees

[rickb928]

You know very little about the unbanked. Watch "Spent: Looking for Change", YouTube by American Express.

Re:

[anoncoward69]

I've never heard of not being able to use debit cards to purchase prepaid cards. Credit cards are another story, because the credit card companies caught on to people making huge purchases and reloads of prepaid cards to rack up points/miles and then pay the credit card card balance down with the prepaids. This was a big thing during the 1st bitcoin boom as well. people making massive purchases of bitcoin on credit to accumulate points/miles, sitting on it a few weeks, then cashing it out, xfering it to th

Re:

[rickb928]

When I had a Serve card, for specific purposes, the rules changed. No debit loads. I've looked at others - Bluebird, only for the Amex -branded account; Many Visa Prepaid cards simply do not specify a method that includes loading from an external account with a debit card - 'checking account', usually scheduled.

In fact, if you look carefully, I've yet to see a prepaid debit that explicitly addresses loading from a debit card. From the checking/ACH account associated with your regular debit card, yes. Cash,

Re:

[anoncoward69]

Why do you need on demand debit loads to a prepaid card unless you're doing sneaky shit behind the back of a significant other? If you're worried about the account details being breached just use a credit card and pay off the balance at the end of the month, if the CC gets breached you can dispute it and not owe a thing till the dispute is settled. If you're doing some other kind of shady purchasing online, do you really think the popo/feds cant subpoena the prepaid card provider to get the details of your

Re: There's more to this than fees

[rickb928]

Ok, here we go...

First, this isn't about 'sneaky shit'. Several good reasons to use a preloaded/reloadable card. My first reason, I didn't want to use a specific credit account for routine charges where I was limited to one issuer. It was for use at a work location. I like my job. Well the issuer changed the rules, and I used cash instead for a while.

Other people use these reloadable cards as a budgeting tool. And some use them to limit their exposure.

So many people don't understand how these instruments ar

Re:

[renegade600]

Why do you need on demand debit loads to a prepaid card unless you're doing sneaky shit behind the back of a significant other? If you're worried about the account details being breached just use a credit card and pay off the balance at the end of the month, if the CC gets breached you can dispute it and not owe a thing till the dispute is settled. If you're doing some other kind of shady purchasing online, do you really think the popo/feds cant subpoena the prepaid card provider to get the details of your debit card used to top up the card and link it right back to you? If you're doing that shit reloading with cash would be the best bet.

I have a serve card and I load it regularly from a debit card. I first started doing it because of mobile banking. It took forever for my bank to add mobile payments to their accounts. I have been using the serve card for years for mobile banking. Now I use the serve prepaid card for online subscriptions, vending machines, flea markets, gas stations or anyplace that I feel is high risk. I just keep enough on it that I feel I can risk at any given time. It is all about keeping my checking account sa

Re:

[smooth wombat]

But they miss the real reason so many are 'unbanked', they just have lifestyles and make choices that do not work within traditional banking.

And by lifestyles you mean being paid in cash off the books. Which means repeated deposits of cash which would, eventually, trigger an investigation into why all that cash keeps being deposited.

As for choices, the lamest excuse I heard is that if they deposit money in the bank, they'd have to pay taxes on the interest earned. Because the tax on fifteen cen

Re: There's more to this than fees

[rickb928]

Many reasons why people are unbanked... Some, when they use payday loans, find they need to pay in cash, at the window, on time. Scrambling from work, probably jamming public transit, no time to go to the bank or find an ATM, pay feed there for being out of network, and they are getting by with a few dollars a week to spare. Some do work jobs paid cash. Not all are avoiding taxes... Many have all they can do to get by week to week.

Re:

[drinkypoo]

The lifestyle choice that led to me being unbanked for years was banking with Wells Fargo. They processed withdrawals immediately and deposits eventually, leading to overdraft fees, then canceled my account and reported me to chexsystems, so I could not get an account.

Some people have no bank account through no fault of their own, unless you call living paycheck to paycheck and banking with a major bank a fault. I was young and knew no better.

Just one more way the poor are punished for being poor.

Don't forget adulterers! :)

[Somervillain]

Prepaid cards are aimed, mostly at the 'unbanked', and intend to give these 'unbanked' a simple and manageable solution to various purchasing problems, especially online purchasing. But they miss the real reason so many are 'unbanked', they just have lifestyles and make choices that do not work within traditional banking.

It's also great for booking a hotel without your wife finding out. :)

I have a friend who is constantly cheating on her husband and went on a long tangent about this. :) She even invited me to join her at a hotel once. I was flattered, and secretly thrilled she asked, but was never going to say yes...not worth the divorce.

For better or worse, some just don't like being tracked. I think in most cases, it is for worse....people hiding things from their spouses or their ex's divorce attorneys. You c

Re:

[volmtech]

I have paperless billing, I pay my card online. My wife couldn't access our account even if I gave her the password. Now the Amazon account is another matter, that she keeps track of.

Re:

[renegade600]

my prepaid card does allow loading from debit cards. Like most things, you really need to do your homework before picking one.

Re: There's more to this than fees

[rickb928]

Share the issuer with us?

Re:

[renegade600]

Share the issuer with us?

american express serve. No fees if loaded at Walmart or online (the two ways I load the card).

Re: There's more to this than fees

[rickb928]

Ah. It wasn't always like that. No, it wasn't.

Re:

[renegade600]

Ah. It wasn't always like that. No, it wasn't.

Its been that way for at least 8 years because that is how long I have had it. Been using it for mobile payments since.

Re: There's more to this than fees

[rickb928]

Well mine didn't... Let's see, 8 years, 2013. I let mine go before that, I had one before it was Amex branded...

Elections matter

[AlanObject]

I have a hard time imagining Bob Barr's DoJ pursuing this so it looks like elections matter.

However, shouldn't the CFPB be doing this?

What they REALLY need to do is ...

[Anonymous Coward]

... stop Visa (and CC companies in general) from dictating the price merchants offer the customers based on the method of payment. You see, CC companies penalize merchants who offer a discount for customers using anything other than a CC. Then they have a percentage of transaction and a per transaction fee they impose on every transaction. The net result is that they've essentially raised the price of all good, since the merchants can't be expected to pay for the additional cost. The real losers are the

Clearly punishment and revenge

[malphiusII]

Glad to see team Biden already punishing their political enemies. Visa somewhat loudly stated they're in the business of facilitating payments, not deciding what social justice cause to take up and who to ban from the banking system. Mastercard and Paypal happily play politics with their services.

100% in defense of Visa. When is the investigation into the later?

Re:

[sjames]

Visa blocked Wikileaks just like the rest.

Re:

[malphiusII]

They did but they haven't gone as far as the rest. They also may not have had a choice with Wikileaks.

Anti-trust

[Iamthecheese]

This is unsexy but vitally important. It's good to see anti-trust laws are being enforced at least sometimes. Now do Amazon, Walmart, and Google.