Visa Rebounds Slightly After Stock Got Hit Last Week on News of DOJ Probe

YEKATAERINBURG, RUSSIA - JAN 07, 2015: Pile of Visa credit cards.
Valeri Potapova / Shutterstock.com

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.

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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

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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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About the Author

Vance Cariaga is a London-based writer, editor and journalist who previously held staff positions at Investor’s Business Daily, The Charlotte Business Journal and The Charlotte Observer. His work also appeared in Charlotte MagazineStreet & Smith’s Sports Business Journal and Business North Carolina magazine. He holds a B.A. in English from Appalachian State University and studied journalism at the University of South Carolina. His reporting earned awards from the North Carolina Press Association, the Green Eyeshade Awards and AlterNet. A native of North Carolina who also writes fiction, Vance’s short story, “Saint Christopher,” placed second in the 2019 Writer’s Digest Short Short Story Competition. Two of his short stories appear in With One Eye on the Cows, an anthology published by Ad Hoc Fiction in 2019. His debut novel, Voodoo Hideaway, will be published in 2021 by Atmosphere Press.

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