Block has hit Visa and Mastercard with a new interchange fees antitrust lawsuit that alleges the payment companies conspired to overcharge the Square payment platform, causing higher retail prices paid by consumers.
Visa and Mastercard hit with interchange fees suit
Block, formerly known as Square, claims that Visa and Mastercard conspired to fix inflated interchange fees and maintain market power, according to a suit filed July 14 in the US District Court for the Eastern District of New York.
Block’s Square payment processing platform directly contracts with Visa and Mastercard to facilitate card transactions for millions of merchants.
Square is the direct payer of the interchange fees, also known as swipe fees, which are charged by Visa or Mastercard and their member banks each time a customer uses a credit or debit card to make a transaction.
“The effect of these artificially inflated fees, assessed to and paid by Square, is higher retail prices paid by consumers economy-wide,” Block said in the suit.
“As retail prices increase in response to inflated fees, consumers can afford less and thus purchase less, reducing output.”
Square merchants don’t pay the interchange fees, but instead pay separate fees set by the company for its payment services.
Block also accused Visa and Mastercard of raising a fee that Square directly pays based on the number of locations a merchant has.
“The fee is highly complex, difficult to calculate, and unavoidable,” Block said in the suit.
Anecdotally, it should be noted that in various markets where regulators have stepped in to forcibly control fees paid my merchants and merchant service Providers, there has been no evidence that the lower fees have been passed on to consumers.
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