The antitrust lawsuit filed Friday (July 14) with the U.S. District Court for the Eastern District of New York stems from the Square payment platform’s alleging of inflated “interchange” fees also known as “swipe fees” charged by Visa and Mastercard with their member banks when a customer uses a credit or debit card, according to 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 claimed 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.
PYMNTS reached out to both Mastercard and Visa for comment. A Mastercard spokesperson said the company hadn’t seen the suit and declined comment. Visa has yet to respond.
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.
It remains to be seen how the court system will act on Block Inc.’s accusations. Whether for better or worse, this is sure to be a case to watch closely in the days to come.