• DoJ claims anticompetitive conduct to maintain debit card dominance
• Stock plunges 5.5%, swiping $30 billion off market cap
• Citi analysts tell clients to switch to Mastercard

Antitrust watchdogs have had Big Tech firmly in theirs sights for months but now its Visa (V:NYSE) that finds itself being hauled over the regulatory coals after the US Department of Justice launched a lawsuit against the credit and debit cards colossus.

The DoJ claims Visa has been unfairly monopolising its debit cards power in the US, accusing the company of engaging in anticompetitive conduct to maintain its dominance, including exclusive agreements that hinder rivals and prevent technology companies from entering the market.

The news saw $30 billion swiped off Visa’s market cap overnight as the stock plunged 5.5% to $272.78.

INVESTIGATION CLAIMS

The lawsuit is the result of a years-long investigation that began after Visa’s failed attempt to acquire fintech company Plaid in 2021, reports say.

Over the course of the inquiry, the DoJ has reportedly scrutinised Visa’s pricing structure and its use of ‘tokenization’ technology, which secures card payment data. The civil complaint was filed on Tuesday (24 Sep) in Manhattan federal court.

Lawsuit the result of a years-long investigation / Image source: Adobe

As ever, investors can expect legal proceedings to drag on for months, if not years, and the big question will be how much this could overhang share price performance.

CITI SAYS SWITCH TO MASTERCARD

While Visa will no doubt put up a stiff defence, pointing to increasing market competitiveness and rival Mastercard’s wins in the debit space, analysts at Citi are not hanging about, telling clients in a note to switch to rival Mastercard (MA:NYSE).

‘It is difficult to assess the penalties that Visa could face until we see the complaint’, the analysts wrote, but they believe it is likely that the lawsuit results in some combination of financial penalties and conduct restrictions that could ‘limit its ability to offer volume-based or other pricing regimes that could discourage merchants from routing debit transaction over alternative networks.’

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