Visa’s (V) stock is down 5% after the U.S. Justice Department accused the credit card company of holding an illegal monopoly over debit payments.
The Justice Department has filed a civil antitrust lawsuit against Visa in New York court accusing the company, which is the largest payments network in the world, of placing exclusionary agreements on its partners and crushing upstart payment firms in an effort to enforce its market dominance.
The Justice Department also alleges that Visa threatens merchants and their banks with punitive rates if they route debit transactions to competitors. In a news release announcing the antitrust lawsuit, U.S. Attorney General Merrick Garland said “We allege that Visa has unlawfully amassed the power to extract fees that far exceed what it could charge in a competitive market.”
Rising Fees are Impacting Consumers
Visa called the Justice Department’s lawsuit “meritless.” Still, the government claims that more than 60% of debit card transactions in the U.S. are handled by Visa’s payment system, helping the credit card giant to charge more than $7 billion annually in processing fees. Visa’s dominance has also drawn criticism from consumer groups and merchants in recent years.
This is the latest in a series of actions taken by the U.S. Justice Department against Visa. In 2020, the Department filed suit to block Visa’s proposed $5.3 billion acquisition of financial technology company Plaid. Visa initially said it would fight the action, but soon abandoned its proposed take over of Plaid.
Is V Stock a Buy?
Visa’s stock has a consensus Strong Buy rating among 21 Wall Street analysts. That’s based on 17 Buy and four Hold recommendations made in the last three months. There are no Sell ratings currently. The average price target on V stock of $315.42 implies 15.63% upside from current levels.
