Japan Antitrust Probe Targets Visa and Mastercard in Credit Card Sector

Visa Faces FTC Scrutiny Over Suspected Unfair Trade Practices in Japan

Tokyo, Japan – Visa Inc. is under inquiry by the Federal Trade Commission (FTC) for potentially violating unfair trade practices in Japan. The FTC has concluded that updated terms imposed by Visa may restrict free transactions and hinder rival authorization providers.This progress follows onsite investigations at Visa’s Japanese subsidiary in July 2024.

Evergreen Insight: Regulatory bodies globally are increasingly scrutinizing dominant players in the payment processing industry. As digital transactions evolve, ensuring fair competition and consumer choice remains a critical focus for authorities. Companies like Visa must navigate a complex landscape of evolving regulations designed to foster innovation and prevent anti-competitive practices, particularly as new payment technologies emerge.

The FTC’s concern stems from Visa’s alleged restriction of free transactions and exclusion of competing authorization providers. This action comes at a time when Visa is experiencing significant competitive pressure from the rapidly growing stablecoin and digital payment sectors. Recent reports indicate that stablecoins are now processing approximately $800 billion in monthly transactions, a volume that is closing in on Visa’s own $1.1 trillion monthly turnover.

evergreen Insight: The rise of stablecoins and choice digital payment solutions represents a essential shift in the financial landscape. These innovations offer potential benefits like lower transaction fees and increased accessibility, directly challenging the established order dominated by traditional card networks. The regulatory frameworks being developed, such as the GENIUS act in the U.S., signal a broader acceptance and integration of these new technologies, which will likely intensify competition for incumbents.

Japan’s credit card market is a substantial economic contributor. In 2024, the market saw approximately 116 trillion yen, equivalent to $788 billion, in processed payments, according to data from the Japan Consumer Credit Association. This significant market volume underscores the importance of fair competition within the payment infrastructure.

Evergreen Insight: Large, established markets like Japan’s are often bellwethers for broader industry trends. The dynamics at play – technological disruption, regulatory oversight, and evolving consumer preferences – are not unique to Japan but are indicative of global shifts in how people and businesses transact. Understanding these competitive pressures and regulatory responses in key markets offers valuable insights into the future trajectory of the payments industry worldwide.

Year-to-date, Visa’s stock has seen a notable increase of over 13%. While this performance outpaces Mastercard Inc.’s 7.60% gain,both companies are currently lagging behind the broader technology sector’s advancements.

Evergreen Insight: Stock performance in the financial services sector, particularly for payment processors, is influenced by a confluence of factors including technological innovation, regulatory changes, economic conditions, and competitive dynamics. While individual company performance can vary, the overall trend often reflects the industry’s ability to adapt to new technologies and consumer demands while navigating regulatory landscapes. Investors often look at how these giants are positioned against emerging threats and opportunities when assessing their long-term value.

What are the potential consequences for Visa and Mastercard if the JFTC finds them guilty of anti-competitive practices?

The Investigation Unveiled: JFTC Scrutiny of Payment Networks

Japan’s Fair Trade Commission (JFTC) has launched a formal antitrust investigation into Visa and Mastercard, the dominant players in the Japanese credit card market. The probe centers around concerns of anti-competitive practices, specifically focusing on potential restrictions imposed on merchants regarding transaction fees and surcharges. This investigation, announced in July 2025, signals a growing regulatory focus on the power of global payment networks and their impact on the Japanese economy. Key terms driving searches around this topic include “Japan antitrust,” “Visa mastercard investigation,” and “credit card fees Japan.”

Core Allegations: What is the JFTC Investigating?

The JFTC’s investigation is built around several key allegations:

Merchant Discount Fees: The primary concern revolves around the high merchant discount fees (MDFs) charged by Visa and Mastercard. These fees, typically a percentage of each transaction, are paid by merchants to accept card payments. The JFTC is examining whether these fees are excessively high and unfairly burden Japanese businesses.

No-Surcharge Rules: A central point of contention is the longstanding prohibition on merchants surcharging customers for credit card use. The JFTC believes this rule artificially inflates the cost of accepting cards, as merchants are unable to pass the fees onto consumers. This practice is under scrutiny in many global markets.

Exclusive Dealing: The investigation also explores potential instances of exclusive dealing arrangements, where merchants are pressured to accept only Visa or Mastercard, limiting competition from other payment methods like Japan’s domestic card network, JCB, or emerging digital payment solutions.

Potential Collusion: While not explicitly stated, the JFTC is likely investigating whether Visa and Mastercard engaged in any form of collusion to maintain their market dominance and control pricing.

Impact on Japanese Businesses: A Deeper Look

The high cost of credit card processing significantly impacts various sectors within Japan:

Retail: Small and medium-sized retailers (SMEs) are particularly vulnerable to high MDFs,impacting their profit margins.

Hospitality: Restaurants and hotels face substantial processing costs, especially with the increasing popularity of cashless payments.

E-commerce: Online businesses, reliant on card payments, also bear the brunt of these fees, potentially affecting pricing and competitiveness.

Tourism: With Japan experiencing a surge in tourism, the impact on businesses catering to international visitors is substantial, as foreign card fees can be higher.

Regulatory Context: Japan’s Push for Payment Diversification

This investigation isn’t happening in a vacuum. Japan has been actively promoting payment diversification to reduce reliance on cash and foster innovation in the fintech sector.

cashless Society Goals: The Japanese government has set ambitious goals for increasing cashless payments, aiming to reduce the costs associated with handling cash and boost economic efficiency.

Fintech Promotion: Initiatives to support fintech startups and encourage the growth of new payment technologies are underway.

JCB’s Role: The JFTC’s scrutiny of Visa and Mastercard also reflects a desire to level the playing field for domestic payment networks like JCB, which has a strong presence in Japan and Asia.

Recent Regulatory Changes: Amendments to the Payment services Act in recent years have empowered the JFTC to take stronger action against anti-competitive practices in the payment industry.

Potential Outcomes and Penalties

if the JFTC finds visa and Mastercard guilty of violating antitrust laws, several outcomes are possible:

cease and Desist Orders: The JFTC could issue orders requiring visa and Mastercard to cease the alleged anti-competitive practices.

Financial Penalties: Substantial fines could be imposed, potentially reaching several percent of the companies’ annual revenue in Japan.

Structural Remedies: In more severe cases, the JFTC could require Visa and Mastercard to alter their business practices, such as lowering MDFs or allowing merchants to surcharge customers.

Increased Scrutiny: Even without significant penalties, the investigation will likely lead to increased regulatory scrutiny of the payment card industry in Japan.

global Implications: A Ripple effect?

The JFTC’s investigation could have broader implications for Visa and Mastercard globally. Other countries are also examining the fees and practices of these payment networks.

EU investigations: The European Union has been actively investigating visa and Mastercard’s cross-border card fees.

US Department of Justice: The US Department of Justice has also been scrutinizing the dominance of Visa and Mastercard in the American market.

Increased Regulatory Pressure: The Japanese probe adds to the growing global pressure on these companies to address concerns about competition and transparency in the payment card industry.

Practical Tips for Japanese Merchants

For businesses operating in Japan, here are some steps to consider:

Review Contracts: carefully review your contracts with Visa and Mastercard to understand your rights and obligations regarding fees and surcharges.

Explore Alternatives: Investigate alternative payment methods, such as JCB, PayPay, Rakuten Pay, and other digital wallets, to reduce your reliance on Visa and Mastercard.

Negotiate Fees: Attempt to negotiate lower MDFs with your payment processor.

* Stay Informed: Keep abreast of developments in the JFTC investigation and any regulatory changes that may affect your business.

case Study: Australia’s Surcharge Ban Removal

In 2017, Australia removed its ban on merchants surcharging customers for credit