Visa Inc (NYSE:V) Accused Of Bad Debit-Card Routing Practices

Visa Inc (NYSE:V) has been facing pressure from the U.S. Department of Justice for quite a while. The department went to court in the previous year, accusing the network of being a stumbling block to fair competition practices.

Competition has been ongoing

Visa had planned to move into a $5.e billion deal with Plaid Inc, but that didn’t happen after the department’s intervention.  The Department of Justice dismissed the combination, outlining that it would negatively impact the debit-card transactions.

The two parties meet again, and this time around, the department launches an antitrust investigation to look into the network’s practices. It focuses majorly on debit-card transactions and has already reached out to Visa regarding the matter.

This department discloses that it lacks confidence in the network’s rules in the routing facet. It wants to check out transactions in the network’s stores and online as well. Journalists have been trying to press Visa’s representatives to open up about the matter, but the officials declined to comment.

Visa is ready for the probe

Visa knows about the department’s plans and has no issues with its moves. The network asserts that it isn’t at fault in any business segment and is willing to be probed. The company spoke out on Friday, claiming that all its debit card practices conformed to the applicable laws. The department disagrees and wants to get to the bottom of the matter.

The challenges don’t seem to be working well for the network’s business, according to sources. Visa’s shares dropped on Friday by a margin of 6.2% to settle at $206.90. The network disclosed that the drop was the biggest to be ever witnessed on a single day over one year.

The Justice Department is all over Visa’s neck, and it was in the previous year that it accused the network of possessing monopoly power. The department spoke out regarding the market and how the company had grown to become a monopoly in debit-card transactions. This department had gone a step further to outline the figure, revealing that Visa clinched almost 70% of such transactions.

Visa moved with speed to dismiss the claims by the department as dubious.