Visa Is Doing What Big American Companies Do to ‘Protect This Business’

By The Editorial Board, New York Times

Visa dominates the lucrative business of processing debit card transactions. Merchants must choose between paying the financial services company’s fees or forgoing sales to the millions of Americans who carry cards emblazoned with Visa’s logo.

A San Francisco technology start-up named Plaid threatened that dominance. The company planned to debut a rival service next year that would charge half as much as Visa.

So Visa did what big American companies have learned to do: It agreed to buy the smaller company, pledging a king’s ransom to eliminate the threat of competition.

Last month, the Justice Department sued to block the deal as a violation of antitrust law. The intervention is necessary to protect the interests of merchants and consumers, and the health of the broader economy. The federal government has been far too permissive in allowing large companies to swallow potential rivals, particularly in the rapidly evolving technology sector.

The Justice Department has destroyed its credibility over the past four years by prioritizing President Trump’s interests over the national interest. Antitrust enforcement is no exception. The department has pursued cases against the president’s enemies, notably investigating an agreement among four auto companies to voluntarily reduce emissions, and it has declined to pursue cases against the president’s friends, allowing T-Mobile to acquire Sprint. But in pursuing the case against Visa, the department is ending the Trump era on a relatively high note, setting an example the Biden administration ought to emulate.

Debit cards, which have soared in popularity in recent decades, allow customers to make purchases by authorizing withdrawals from their bank accounts. Visa operates a system that connects the buyer’s bank and the merchant’s bank. For this service, the merchant pays a fee to Visa and to the bank that issued the card. Other companies offer a similar service, but Visa is the dominant player. It processed about 70 percent of the online debit transactions in the United States last year, a business that produced about $2 billion in profits.

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