The Department of Justice is expected to file a suit against the credit card processor.
Shares of Visa (V -4.11%) were moving lower today on reports that the Department of Justice (DOJ) is preparing to sue the financial services titan over antitrust concerns.
Not surprisingly, the stock pulled back on the news, down 4% as of 10:03 a.m. ET.
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Antitrust strikes again
Nearly every big tech company, it seems, has been sued by the federal government recently, so it’s not a surprise that Visa, which has one of the largest economic moats in the business world, has earned the ire of the DOJ.
According to The New York Times, the DOJ is preparing to sue Visa for blocking out competitors by punishing customers when they try to use alternative services to process payments.
The lawsuit could come as early as Tuesday and follows an investigation that has gone on for years. The DOJ also — successfully — sued the company to block its acquisition of Plaid in 2020.
What this means for Visa
Since the suit hasn’t yet been filed, it’s difficult to say what the impact on Visa’s business will be. At a minimum, it’s likely to be a legal headache for the payment processing giant, and at worst, it could result in billions of dollars in fines and prevent Visa from entering new markets.
Dislodging the company’s grip on the credit card industry won’t be easy, though. It essentially has a duopoly with Mastercard, and its network of merchants would be difficult to rebuild from scratch.
Visa had an estimated 52% of credit card purchase volume in the U.S. in 2022 ($2.84 trillion), and it has the operating margins that indicate a monopoly at greater than 60%.
Stay tuned, as the stock is likely to move again when the lawsuit is filed.
Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Mastercard and Visa. The Motley Fool recommends the following options: long January 2025 $370 calls on Mastercard and short January 2025 $380 calls on Mastercard. The Motley Fool has a disclosure policy.