Block claims the card giants, in concert, overcharge its Square payments platform and maintain market dominance.

Visa Inc. and Mastercard Inc. are currently facing allegations in an antitrust lawsuit. The plaintiff, Block Inc. (NYSE: SQ), formerly known as Square Inc., asserts that Visa (NYSE: V) and Mastercard (NYSE: MA) collaborate to manipulate interchange fees, causing inflated costs and maintaining their dominance in the market.

The suit alleges that the credit card companies conspired to overcharge the Square payment platform, resulting in higher retail prices for consumers. The lawsuit was filed on July 14 in the US District Court for the Eastern District of New York. (BloombergLaw)

Block’s Square payment processing platform directly engages with Visa and Mastercard for facilitating card transactions, making Square responsible for paying the interchange fees. These fees are charged by Visa or Mastercard and their member banks whenever a customer utilizes a credit or debit card for a transaction.

The suit by Block argues that the artificially inflated fees ultimately lead to increased retail prices, resulting in reduced consumer purchasing power and output. While Square merchants are not directly charged interchange fees, they do pay separate fees determined by the company for its payment services.

Furthermore, Visa and Mastercard are currently increasing the fee that Square must pay on the basis of the number of locations its merchants operate. As a result, according to Block, the fee is complicated, challenging to compute, and unavoidable.

Visa and Mastercard have not yet provided a comment in response to the allegations.

The case is identified as Block, Inc. v. Visa Inc., E.D.N.Y., No. [1:23]-cv-05377, filed on July 14, 2023.

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