Photo/Illutration The Japan Fair Trade Commission in Tokyo’s Chiyoda Ward has issued its first administrative action involving the credit card industry following a probe of Visa Worldwide Pte Ltd.'s Japanese subsidiary in July 2024. (Asahi Shimbun file photo)

The Fair Trade Commission has obliged a Visa group company to adhere to its corrective action plan over suspicions that it effectively forced credit card companies to use the group’s credit authorization system.

Visa Worldwide Pte Ltd.’s Singapore headquarters submitted its voluntary plan following the FTC’s investigation in accordance with the “commitment procedure” based on the Anti-Monopoly Law, commission officials announced July 22.

It was the FTC’s first administrative action against the credit card industry.

The commission approved the company’s plan. Visa Worldwide will be required to report to the FTC on how the plan is implemented for five years.

Visa is the largest international credit card network. Visa Worldwide, based in Singapore, operates the group’s business in Asia, including Japan.

Visa, which does not issue credit cards on its own, provides systems necessary for credit card transactions.

It receives license fees from credit card companies that issue cards to consumers as well as from those that process payments made to retailers, restaurants and other businesses.

The FTC investigation focused on Visa Worldwide’s actions regarding the group’s credit authorization system.

When consumers pay with their credit card, credit card companies that manage affiliated outlets use this system for a fee to check the spending limit or possible fraudulent use with cardholders’ credit card companies.

According to the FTC, when Visa Worldwide changed its terms in November 2021 it rendered credit card companies that manage affiliated outlets ineligible for a discount in a type of commission charged for payments in certain industries unless they use Visa’s credit authorization system.

After the company announced the change in February 2018, the FTC said almost all credit card companies that had used a rival credit authorization system switched to Visa’s system.

The watchdog also shared that Visa received about 10 billion yen ($68 million) annually in fees charged to these companies for using its credit authorization system.

The FTC conducted an onsite investigation of Visa’s Japanese subsidiary last July on suspicion that the updated terms restricted free transactions of credit card companies and excluded companies that provide a rival credit authorization system.

It concluded that Visa Worldwide’s action constituted a suspected violation of the Anti-Monopoly Law that prohibits unfair trade practices such as “trading on restrictive terms.”

According to the Japan Consumer Credit Association, the country made about 116 trillion yen in payments via credit cards in 2024.

A survey by the private research company Ipsos found that the Visa brand accounted for about 50 percent of that amount.

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