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Block sues Visa and Mastercard over interchange fees

Block is suing Mastercard and Visa over the interchange and other fees imposed by the duopoly on the Square payments platform.

2 comments

Block sues Visa and Mastercard over interchange fees

Editorial

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As reported by Bloomberg, Block 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.

Square, which charges users fees for payments passed over its platform, directly pays the interchange charges levied by the card schemes.

“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.”

Block has also complained about seperate charges applied by Visa and Mastercard that are determined by merchant locations and size, arguing that the fee is "highly complex, difficult to calculate, and unavoidable".

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Comments: (2)

Dinesh Katyal Director Product at Financial Data Exchange

Is it a case of biting the hand that feeds you? Doesn't Block make much of its revenue from a portion of the interchange? And wouldn't a cap or reduction of interchange directly impact payment volume and their share of it?

Ketharaman Swaminathan Founder and CEO at GTM360 Marketing Solutions

LOL @DineshKatyal + 1.

Last I checked, Block / Square used to levy a flat fee of 2.75% to its merchants, of which 2% went to Visa / Mastercard as interchange fee. Reading between the lines of this complaint, I'm guessing V / MC have hiked their fee so Block's rake has fallen from 0.75%.

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