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Visa’s on the Justice Department’s naughty listINTL

Visa’s on the Justice Department’s naughty list

Uh-oh, it looks like someone is in trouble (*grabs popcorn*). Visa Inc. (V) is reportedly being investigated by the US Department of Justice over its methods for routing debit card transactions.

According to the 2010 Durbin Amendment law, banks must include two networks on their debit cards (this can be a major one like Visa or Mastercard and a smaller one like Star or Pulse). The DoJ argues that Visa’s debit card technology makes it harder for online transactions to be routed over alternative networks, hence limiting competition in the online transactions market. Visa, meanwhile, claims its debit practices are in accordance with the law and that it faces plenty of competition from rival Mastercard. Sounds like a bickering couple to us!

News of the antitrust probe didn’t go down well with investors — Visa’s shares dropped 6.2% on Friday, their biggest daily drop in nearly a year.

why it matters
You'd think this was personal as the DoJ recently stopped Visa’s $5.3b acquisition of Plaid too, claiming it would unlawfully increase its monopoly in the online debit card transaction market. This latest battle in the two's long-standing feud might take over a year to resolve itself, though, so tune back in to hear of further developments.