Visa Rebounds Slightly After Stock Got Hit Last Week on News of DOJ Probe
Visa’s (NYSE: V) stock price rebounded slightly on Monday after sinking more than 6% Friday — its biggest single-day drop in nine months — after The Wall Street Journal reported that the Justice Department has launched an investigation into the credit-card company’s debit-card business and possible anticompetitive practices.
The DOJ wants to determine whether Visa, the nation’s biggest card network, has limited the ability of merchants to route debit-card transactions over less-expensive networks, according to a Friday article on CNBC, which referenced The Wall Street Journal article.
Network fees appear to be at the heart of the investigation. These are fees payment processors charge merchants in exchange for access to the processors’ networks — which in Visa’s case is huge. The DOJ reportedly wants to find out if Visa’s fee policies give it an unfair, and potentially illegal, market dominance. Visa earns a fee for every transaction that runs on its network
ABC News noted on Friday that debit card fees have been strictly regulated since Congress passed the Dodd Frank Act following the 2008 financial crisis. The aim was to ensure merchants weren’t unfairly hurt by fees for debt-card transactions, which tend to bring much smaller profit margins than higher-ticket credit-card transactions.
News of the WSJ report sent Visa’s stock price down 6.24% to close at 206.90 on Friday, its lowest point in a month. But shares rose 0.53% to 208 on Monday, MarketWatch reported. The stock is down about 5% since the beginning of the year.
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