Visa told by Japan antitrust watchdog to reform credit info system
It marks the first administrative action taken by the Japan Fair Trade Commission against a credit card company. The commission said global credit card brand Visa Inc.'s Singaporean unit, which manages the Asia-Pacific region, including Japan, had charged higher fees to other credit card companies that did not use its network to check credit information.
The commission said the Visa unit has submitted plans to improve its practices, adding that it has accepted the plans. The company was exempted from facing fines or other punitive measures under the antimonopoly law.
According to the Japan Consumer Credit Association, as of 2020, the Visa credit card brand accounted for about half of the market share in Japan. The total amount of credit card transactions in the country in 2024 stood at 116 trillion yen ($785 billion).
Credit card transactions involve an issuing company and a management company, which both utilize a trusted reference system when a transaction is made, according to the watchdog.
Interchange fees, typically set by global brands, are paid by the management company to the issuing company during a transaction, while the issuing company pays a service charge to a different company -- in this case Visa Worldwide -- providing the reference system.
While Visa Inc. had applied preferential rates under certain requirements, it altered the conditions from no later than November 2021 to necessitate the use of its network, leading some companies to switch to the system under Visa despite it costing more than others.
Visa's practice is believed to have been aimed at increasing revenue by excluding competitors from the market.
Japanese authorities had been investigating allegations that the practice violated the antimonopoly law, which prohibits companies in a dominant position from imposing unfair trading terms on firms with a weaker standing.
Tuesday's administrative action against Visa Worldwide does not mean that the practice "violated" the law.
Under the plans submitted to the commission, the Visa unit will restore conditions for preferential rates to previous iterations. A third-party entity, approved by the watchdog, will also check for improvements and report to the commission over the next five years.
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