Visa Gets Drop-Kicked by DOJ Over "Dirty" Monopolization Tactics... (Visa Shares Plunge)

In the latest installment of Big Tech vs. The Feds, the U.S. Department of Justice (DOJ) has Visa Inc. in its crosshairs, and it’s not looking pretty for the payments giant. 

(Source: Giphy) 

In short, the DOJ came out swinging, leveling a full-blown antitrust lawsuit with an accusation that Visa’s been playing dirty -  running the debit card game like it’s some kind of private country club, creating what the DOJ calls a “web of exclusionary agreements.” Translation: they’ve been throwing up roadblocks to make sure no one else can get a piece of the pie, aka: Monopolizing. 

(Source: CNBC)

Unsurprisingly, Visa’s stock didn’t take the news too well. Shares tanked 5.5% on Tuesday, because, well, investors, who hate lawsuits almost as much as they love collecting fat dividends, are understandably spooked. The fear? If the DOJ wins, Visa’s cash-printing machine might hit a serious speed bump.

Attorney General Merrick Garland didn’t hold back on his comments as he stated, “Visa has unlawfully amassed the power to extract fees that far exceed what it could charge in a competitive market.” In other words, Visa’s been running the debit card monopoly like it’s Y2K all over again, and the DOJ has had enough of it. 

(Source: NPR) 

Keep in mind though, this is not just a couple of swipe fees we’re talking about here. For those of you not aware of how much of an absolute UNIT Visa is, they control a staggering 60% of the U.S. debit card market. That’s not just a moat around their business — that’s a friggin fortress. 

And Visa’s been using that power to rake in $7 billion in annual processing fees left, right, and twice on Sunday. The DOJ claims that Visa’s been keeping potential competitors at bay with “generous monetary incentives” (read: bribes) and slapping fees on anyone who dares to step out of line. Oh, and they’ve got receipts.

(Source: Giphy) 

In addition to this, it also gets juicier as the lawsuit even spilled some tea on Visa’s historical tactics. For instance, back in 2014, after inking a deal with Square (now Block), a Visa exec was caught saying they’ve got Square on a “short leash.” Translation: Nothing says “partnership” like implying you’ve got your partner on lockdown. And if that wasn’t enough, Visa apparently saw Apple Pay as an “existential threat.” Because God forbid someone other than Visa makes it easier for you to tap your phone at Starbucks.

(Source: Courthouse News) 

As for Visa though, well, they’re not exactly lying down and taking it. They came out guns a blazin’ too, calling the lawsuit “meritless” and saying the DOJ’s ignoring the fact that Visa is just one of many players in a “growing” debit card market. They pointed to the “ever-expanding universe of companies offering new ways to pay” as proof that competition is alive and well. Yeah, because, it’s ‘so easy’ for a new payments company to just casually compete with a $500 billion behemoth (Sarcasm, obvi). 

What’s interesting about this new fiasco though, is that this isn’t Visa’s first rodeo with antitrust regulators. Back in 2020, their $5.3 billion takeover of fintech darling Plaid got straight-up body-bagged by the DOJ. And over at Mastercard? They’ve already settled with the FTC over similar shady allegations. So it’s clear that Visa’s basically the latest target in what’s becoming a payments industry smackdown.

(Source: Giphy) 

So given all of this, why does lawsuit matter? Well, simply put, if the allegations hold weight and Visa’s been overcharging merchants for years — and those merchants have been passing the costs onto you — this lawsuit could mean serious savings. 

The DOJ is hoping that if Visa gets taken down a peg, it’ll lead to lower fees, more competition, and maybe, just maybe, fewer price hikes on everything from groceries to gas. A win for consumers? We shall see.

(Source: Giphy) 

But again, this lawsuit is just the latest move in the Biden administration’s quest to body-check corporate power. Progressive officials have been screaming that companies like Visa have gotten way too big for their britches, and now they’re using their weight to crush the little guys. So naturally, the DOJ’s out to change that, and Visa just happens to be the fattest fish in the pond right now.

(Source: Giphy) 

In the end, it’s no secret that this case is going to be yuuuuge. With billions of dollars on the line and the potential to reshape how we pay for everything, Visa’s showdown with the DOJ is going to be closely watched by everyone from Wall Street to Washington. Meaning, If you’ve got a debit card in your wallet, or you’re a Visa investor…  this one’s definitely worth paying attention to. 

In the meantime, keep an eye out on this story and as always stay safe and stay frosty, friends! Until next time… 

P.S. Last Thursday, we dropped an alert exclusively for our premium members, and by market close, that stock soared 140.45%. If you missed it, well, don’t worry - you’ve got one last shot at redemption. Our next alert is dropping TODAY at 12 PM ET, and trust me, you don’t want to be the one sitting on the sidelines again. Click here to become a premium member and get in before the next stock takes off!

Stocks.News holds positions in Apple as mentioned in the article.