Former Twitter CEO’s company takes legal action against Mastercard and Visa


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Block, a major player in the digital payments industry headed by Twitter creator Jack Dorsey, has taken a bold step by filing a lawsuit against payment card giants Mastercard and Visa, accusing them of engaging in anticompetitive practices and charging inflated fees to merchants. 

The lawsuit, filed on 14 July in federal court in the Eastern District of New York, alleges that banks associated with both networks colluded to support network fees, known as interchange fees, at a higher level than would be expected in a competitive market.

The legal action brought by Block’s CEO (former CEO of Twitter) against Visa and Mastercard

At the heart of the complaint is the “Honor All Cards” policy, which requires merchants to accept all cards, regardless of issuing bank, on Visa or Mastercard networks. 

This policy eliminates the need for issuing banks to compete for merchant favor, leading to a lack of price competition and inflated fees. 

As a result, interchange fees, which vary by merchant type, size and consumer card, typically range from 1% to 2.5%.

The lawsuit points out that 82% of US consumers own at least one credit card, leaving merchants little choice but to accept all types of cards. 

In addition, the growing popularity of digital wallets and tap-to-pay options has made credit card use more convenient for consumers. 

Despite merchants’ dissatisfaction with interchange fees, Visa and Mastercard continue to see an increase in transaction volume because of the convenience and fraud protection they offer consumers.

Both Visa and Mastercard began as associations of banks, which worked collaboratively to govern their respective networks. 

In the past, both companies have faced disputes over interchange fees, and the current lawsuit filed by Block adds to the list of legal challenges the payments giants have faced. 

Industry giants must also cater to regulators’ moves

The lawsuit from former CEO of Twitter against Visa and Mastercard comes amid increasing scrutiny of their practices by regulators. 

In January, the antitrust division of the US Department of Justice launched an investigation into the practices of Visa.

Block, known for its Square business, has played a significant role in the spread of payment cards in the United States. 

Square’s low-cost readers have become commonplace among small and medium-sized businesses, including in flea markets and merchants. Square covers Visa and Mastercard fees for its merchants and charges platform fees accordingly.

Visa, which processes more than 60% of credit card transactions in the United States, saw payment volume reach $14 trillion for 80 million merchants by 2022. Mastercard, the second largest credit card network, processed $8.2 trillion globally in the same year.

The outcome of this lawsuit could have far-reaching implications for the payments industry and could prompt further scrutiny of the interchange fee structure. 

As regulatory scrutiny advances, payment card giants will likely face continued challenges to their business practices. 

In the wake of this lawsuit, other payment card companies and financial institutions may face increased scrutiny and pressure to review their fee structures and business practices.

Regulators and industry stakeholders will be watching developments closely, and any significant changes in the payments landscape could have far-reaching effects on the financial industry and consumer experience.

The outcome of any legal battle could change many things

For merchants and consumers, the outcome of this legal battle could affect the future of payment card fees and the overall cost of doing business in the digital economy.

But not only that, the outcome of the lawsuit against Visa and Mastercard could have significant implications not only for these payments giants, but also for the entire financial industry. 

Allegations of inflated merchant fees and anti-competitive practices highlight the need for greater transparency and fair competition in the payments industry.

The “Honor All Cards” policy, which requires merchants to accept all cards regardless of the issuing bank, has been a contentious point of debate. 

While this policy ensures wide acceptance of cards and convenience for consumers, it may stifle competition among issuing banks, leading to higher interchange fees. 

Should the legal action be successful, it could prompt a reevaluation of these policies to promote a more competitive environment in the payment card industry.

The growing popularity of digital wallets and contactless payments has driven the adoption of payment cards, making them the preferred choice for consumers. 

However, with more and more people relying on cards for everyday transactions, merchants are grappling with the burden of interchange fees that eat into their profits. 

Addressing the issue of interchange fees can lead to a fairer system for merchants and potentially lower costs for consumers as well.

Although the legal action focuses on the actions of Visa and Mastercard, the broader impact could extend to the entire payments ecosystem. 

As regulators continue to examine the industry, it is possible that it will push for more comprehensive reforms to promote transparency, competition and fairness in the payments market.


In conclusion, the lawsuit filed by Block against Visa and Mastercard sheds light on the complex world of interchange fees and payment card practices.

Although these fees have long been a concern for merchants, the legal challenge presents an opportunity for the industry to reevaluate its policies and promote a more competitive and transparent environment. 

As the case evolves, it will be critical that regulators, financial institutions, and merchants work together to create a payments ecosystem that is fair, efficient, and beneficial to all parties involved. 

Only then can the full potential of digital payments be harnessed to promote economic growth and financial inclusion in the years to come.