If the deal with Plaid takes place, Visa will have access to 2,600 fintech apps and about 200 million bank accounts of users.

Visa Inc (NYSE: V) is currently facing antitrust scrutiny over its deal to acquire fintech firm Plaid. The U.S. Department of Justice is concerned that the payments giants are about to acquire a potential competitor. Hence, the department has filed a petition with a court in Massachusetts, requesting more details on the deal on the 27th of October. 

Visa Faces Antitrust Scrutiny Over Acquisition of Plaid

In January, Visa announced its agreement to purchase Plaid in a $5.3 billion deal. At that time, Visa CEO and chairman Al Kelly said that the acquisition would equip the company with more value to serve users. According to a report by The Wall Street Journal, the Department of Justice could conclude whether to sue to stop Visa from acquiring Plaid. Now, the Justice Department’s petition is requesting details on the deal from Visa’s consulting firm Bain & Co. The department said the consulting firm has been inappropriately holding useful tools in the ongoing investigation of the merger. 

As part of the antitrust review. The government is demanding documents that contain Visa’s plan on pricing and rivalry with other payment networks. Some of the documents the government is demanding from the consulting firm also contain Visa’s strategies on its rivalry with other payments companies. 

In a Reuters report, the Justice Department said that the consulting firm was “asserting unsupported claims of privilege over the documents.”

Upon successful acquisition of Plaid, Visa will have access to 2,600 fintech apps and about 200 million bank accounts of users.

Visa and Mastercard Stives To Expand Beyond Card Payments

The government has always been concerned about the strength and position of Visa, along with its rival Mastercard Inc (NYSE: MA), in the payments industry. Recently, the British Retail Consortium (BRC) accused Visa and Mastercard of excessive charging fees. 

Since the beginning of the persistent pandemic, many have resorted to card payments to curb the spread of the virus. This has led to the rise in card payments globally. 

The head of finance policy at BRC Andrew Cregan said that the action by the payment giants is an abuse of their dominant position in the market. Cregan also made examples of fees increases over the years. 

Over time, payment apps like PayPal Holdings Inc (NASDAQ: PYPL) and Venmo are becoming threats to Visa and Mastercard. These apps allow users to send and receive money without using a debit or credit card. Visa’s agreement to acquire Plaid shows the company’s effort to expand its business beyond the card payments. 

Months after Visa’s announcement on the 13th of January, Mastercard also announced its $825 million deal to acquire real-time financial data provider Finicity. Despite the recent increase in the use of card payments, Visa’s stock has been declining. The payments giant has dropped 4.295 in the past three months and nearly 5% in the past month. Also, V has lost 4.22% in the last five days. 

However, Visa added gains in the past year and its year-to-date record. The company has increased by 1.15% in 2020 and over 6% in the last twelve months. 

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