Visa confirms antitrust probe by DOJ: Stocks fall

 

On Friday, Visa confirmed that the company is being investigated by federal agencies. The Department of Justice has initiated a probe. It is checking whether the company used anticompetitive practices to remain at the top of the debit card market.

 

The Wall Street Journal reported the investigation by the DOJ and the company’s stocks fell by 6.2%. It closed at $206.90. According to sources familiar with the matter, the investigation is looking to see if Visa improperly blocks merchants from using rival payment networks for debit-card transactions. Rival networks often charge lower fees.

 

Merchants have complained about this from many years. When they have tried to use smaller networks like Shazam or NYCE with a card that bears the name of Visa or MasterCard, it cannot be used through these smaller networks. So, they have to pay higher transaction fees when compared with the smaller ones who charge less, according to the WSJ.

 

The feds are also looking to see if the incentive offered by Visa to banks encourages them not to route payments through other networks but to exclusively use the ones who give them larger incentives. This is also another aspect of the probe according to one source.

 

Two months ago, Visa had withdrawn from a $5.3 billion acquisition of Plaid because of the antitrust proceedings. In November, the DOJ had filed a lawsuit to stop the merger. The Justice Department allegedly said that this partnership was being put in place to stop a rival from ascending.

 

The Justice Department alleged that Visa CEO, Al Kelly had proposed merger as an “insurance policy.” to protect its U.S. debit-card business. Visa disagreed with this view and said that Plaid was not a competitor.

 

On Friday, the Department of Justice did not respond when ask for comments.

According to its annual report, Visa’s total payment volume was $8.9 trillion in 2019. This is almost double of MasterCard who is the second largest player in the market.


Follow us on Google news for more updates and News










PLEASE READ THE IMPORTANT DISCLOSURES BELOW.

This content is being provided to you for informational purposes only. The content has been prepared by third parties not affiliated with CWEB Inc, a business. This content and any information contained therein, does not constitute a recommendation by CWEB to buy, sell or hold any security, financial product or instrument referenced in the content. This information neither is, nor should be construed as an offer, or a solicitation of an offer, to buy or sell securities by CWEB Inc. CWEB Inc. does not offer or provide any opinion regarding the nature, potential, value, suitability or profitability of any particular investment or investment strategy, and you shall be fully responsible for any investment decisions you make, and such decisions will be based solely on your evaluation of your financial circumstances, investment objectives, risk tolerance, and liquidity needs.

Unless stated otherwise, the web content provided by the CWEB family of companies is for educational purposes only. The information and tools provided neither are, nor should be construed, as an offer, or a solicitation of an offer, to buy or sell securities by CWEB Inc. or its affiliates. Unless stated otherwise, no information presented constitutes a recommendation by CWEB Inc. or its affiliates to buy, sell or hold any security, financial product or instrument discussed therein or to engage in any specific investment strategy.

Full Disclaimer


>