Visa Japan Branch Investigated Over Allegedly Fraudulent Card Dealer Practices

TOKYO (Kyodo) — Japan’s antitrust watchdog on Wednesday investigated the Japanese unit of global credit card brand Visa Inc. for allegedly pressuring card companies to use only its credit information system, a practice that could limit competition and harm consumers, sources familiar with the matter said.

The Visa unit is suspected of charging higher fees to credit card companies that did not use its network to check credit information, forcing them to stop using rival networks or switch to its network, the sources said.

The Japan Fair Trade Commission conducted an inspection at Visa Worldwide Japan Co.’s Tokyo office because the alleged practice violated the country’s antitrust law.

The law prohibits dominant companies from imposing unfair trading conditions on weaker companies. The regulator can issue cease and desist orders or impose fines if it finds a violation.

According to Sumitomo Mitsui Card Co., the largest credit card company in Japan, Visa is the most popular credit card brand, accounting for about half of the market share.

Visa’s practice is likely designed to exclude competitors from the market, which could keep fees high and increase the burden on consumers and merchants using the service, the sources said.

According to sources, most domestic credit card companies use networks operated by Visa or NTT Data Japan Corp. to check credit information.

The watchdog also plans to look into Visa’s Singapore-based unit, which oversees the company’s business in the Asia-Pacific region, as it suspects it may have been involved in the practices being investigated, the sources said.

According to JFTC representatives, the investigation is aimed at checking whether Visa’s US headquarters played any role in this.

According to the Japan Consumer Credit Association, the total value of credit card transactions in Japan in 2023 was about 105 trillion yen ($670 billion).