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NEW YORK -- The U.S. Department of Justice (DOJ) is probing the fee changes Visa Inc. made in the wake of the 2010 Dodd-Frank Wall Street Reform Act, reported the Wall Street Journal. During a Wednesday conference call, after reporting fiscal second-quarter earnings, Chairman and CEO Joseph Saunders disclosed that the department had requested information on elements of its new debit strategies, including a fixed fee it charges merchant banks.
"In March, we met with the department twice and provided materials in response [to the request]," said Saunders. "We are confident our actions are appropriate and that our response to the DOJ supports that."
The DOJ issued its request as a civil investigative demand, a process that antitrust regulators used to obtain information from companies, reported the WSJ.
After the Dodd-Frank Act's Durbin Amendment, which required that debit card swipe fees be "reasonable and proportionate" to the actual cost of processing a transaction, went into effect, Visa made several changes to its fee structures, including the addition of a fixed fee based on merchant size, number of locations and monthly volume, while reducing existing variable fees assessed on each transaction, according to the report. The fee went into effect April 1.
Visa faced criticism from the Electronic Transaction Association, which issued a letter to Visa earlier this year complaining that it had not given enough notice about the changes. However, Saunders stated that "there hasn't been a lot of reaction to" the changes, and added that they were not made "with the intent of raising prices."
Saunders stated that the possible scenarios that the probe could lead to are built into Visa's earnings outlook. Visa saw a 46 percent increase in profit this quarter due to higher transaction volume and the remeasurement of net-deferred tax liabilities, but said that U.S. debit-payment volumes growth has slowed recently.