Why Visa Stock Dropped Today

Actions of Visa (V -4.35%) shrank today on reports that the Department of Justice (DOJ) is preparing to sue the financial services titan over antitrust concerns.

Not surprisingly, the stock retreated on the news, down 4% as of 10:03 a.m. ET.

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Antitrust strikes again

Almost every big tech company, it seems, has been sued by the federal government recently, so it’s no surprise that Visa, which has one of the biggest economic moats in the business world, has drawn the ire of the DOJ.

Conformable The new York TimesThe DOJ is preparing to sue Visa for locking out competitors by punishing customers when they try to use alternative services to process payments.

The trial could come as early as Tuesday and follows an investigation that has been going on for years. The DOJ also sued the company — successfully — to block its 2020 acquisition of Plaid.

What does this mean for Visa?

Because the lawsuit has not yet been filed, it is difficult to say what the impact will be on Visa’s business. At the very least, it’s likely to be a legal headache for the payment processing giant, and at worst, it could lead to billions of dollars in fines and prevent Visa from entering new markets.

Removing the company’s stranglehold on the credit card industry won’t be easy, however. It essentially has a duopoly with MasterCardand its merchant network would be difficult to rebuild from scratch.

Visa had about 52% of US credit card purchase volume in 2022 ($2.84 trillion) and has operating margins that indicate a monopoly of more than 60%.

Stay tuned as the stock may move again when the lawsuit is filed.