Japan Orders Visa to Reform Business Practices Over Credit Card Network

The Japan Fair Trade Commission announced on Tuesday that it had instructed Visa Worldwide Pte Ltd. to revise its business practices. This action followed a determination that the company had restricted and pressured card companies to utilize its credit information system. This marks the first time the commission has taken administrative action against a credit card company.

The commission found that Visa Inc.'s Singaporean unit, which manages the Asia-Pacific region including Japan, had charged higher fees to credit card firms that did not use its network for credit information checks. Visa Worldwide has since submitted plans to improve its practices, which the commission has accepted. As a result, the company avoided fines or other penalties under the antimonopoly law.

Visa Worldwide responded by stating that it would implement the submitted plans and maintain a robust compliance structure. The Visa credit card brand held a significant market share in Japan, accounting for approximately half of the market as of 2020. In 2024, the total value of credit card transactions in Japan reached 116 trillion yen.

Credit card transactions involve both issuing and management companies, which rely on a trusted reference system. Interchange fees, typically set by global brands, are paid by the management company to the issuing company. The issuing company, in turn, pays a service charge to the provider of the reference system, in this case, Visa Worldwide.

Visa Worldwide had previously offered preferential rates under certain conditions. However, it changed these conditions, starting no later than November 2021, to require the use of its network. This led some companies to switch to Visa's system, even though it was more expensive. This practice was believed to be aimed at increasing revenue by limiting competition.

Japanese authorities investigated whether this practice violated the antimonopoly law, which prohibits companies in a dominant position from imposing unfair trading terms. The administrative action taken on Tuesday does not constitute a legal finding of a violation.

As part of the improvement plans, Visa Worldwide will reinstate the previous conditions for preferential rates. Additionally, a third-party entity, approved by the commission, will monitor the improvements and report to the commission over the next five years.