Russian music website AllofMP3.com has had its payment facilities through Visa International and MasterCard suspended following concerns over the legality of its operation.
The two leading payment systems have asked member banks to stop processing purchases from AllofMP3.com, which typically charges around 15 cents for a three-minute song and $2 or less for a whole CD.
Apple's iTunes store, by contrast, charges 99 cents per song and about $10 per CD.
AllofMP3.com operates under a Russian 'broadcasting licence' which it claims gives it permission to distribute digital content freely. The company is believed never to have made royalty payments to any international rights organisation.
The operation is becoming a major bone of contention between the US and Russia in negotiations to secure Russia a place in the World Trade Organisation.
According to some sources, AllofMP3.com is now planning to develop a downloadable software player that will display ads to users as they play free music downloads.
But details of the proposed system are sketchy and the site operators have released no official information.
Payment methods on the AllofMP3 site currently include debit cards, which offer no consumer protection, gift certificates and pre-paid iCards from xRost, a company that lists no phone numbers or address details on its contacts page.