Today, Visa and Mastercard were accused by Block of conspiring to inflate fees and increase retail prices paid by consumers.
The antitrust lawsuit filed with the US District Court for the Eastern District of New York stems from the Square payment platform’s alleging of inflated “interchange” fees considered “swipe fees” charged by Visa and Mastercard with their member banks every time a customer uses a credit or debit card, reported Bloomberg.
“The effect of these artificially inflated fees—assessed to and paid by Square—is higher retail prices paid by consumers economy-wide,” Block Inc. said in the suit. The company further claims that these fees are “highly complex, difficult to calculate, and unavoidable,” especially now that Visa and Mastercard are raising the fee incurred by Square based on the number of merchant locations they provide for.
These accusations are not the first of their kind for Visa and Mastercard, as they have already been swept up in a massive antitrust case stemming from fix interchange fees, with other major credit card companies accused of the same practice.
Square is one of many companies challenging Visa and Mastercard, claiming that their inflated fees significantly increase the cost of retail goods due to these companies’ stranglehold on the payment processing market.
Visa and Mastercard have been widely praised for their convenience, but this new suit reveals just how much inflation may be hidden behind the swipe of a card. If the allegations prove true, it could mean that Visa and Mastercard have engaged in anti-competitive behavior that results in consumers overpaying for goods and services across the economy.
It remains to be seen how the court system will act on Block Inc.’s accusations against Visa and Mastercard. Whether for better or worse, this is sure to be a case to watch closely in the days to come.
Source: News Bloomberg Law