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October 28, 2021

Antitrust investigators scrutinise Visa’s fintech tie-ups

By Shalini mani

The US Department of Justice (DOJ) is reportedly looking into Visa’s partnerships with large fintech firms including Square, Stripe, and PayPal as part of an ongoing antitrust probe.

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The financial incentives provided by the American payment giant to these fintechs are now being analysed by antitrust investigators, WSJ reported citing people with knowledge of the development.

Investigators are looking at whether these deals made the fintechs refrain from leveraging other card networks and payment technologies, the sources said.

DOJ launched its antitrust probe of Visa in March this year to examine whether the firm reduced merchants’ ability to route debit-card transactions over less-expensive networks.

Visa, which is said to be the biggest network in the US, provides payment rails for debit and credit card payments. It allows fintech firms to use its rails for transactions with a fee.

According to sources, Visa offered to minimise its fee for Square and send performance payments to the firm that would increase when Square makes more transactions.

This has led Square to use Visa for several of its Cash App transactions, some of the sources said.

In January this year, Visa and fintech Plaid abandoned their $5.3bn merger agreement after DOJ filed a civil antitrust lawsuit.

The lawsuit, filed by DOJ last November, alleged that the deal could negatively impact competition in the payments sector.

It said that the deal would do away with significant competition from Plaid, which is building a payments platform that would challenge Visa’s monopoly in the online debit market.

Meanwhile, Visa’s recent earnings statement showed GAAP net income of $3.6bn in the fiscal fourth quarter, a 68% surge compared to the same quarter a year ago. Net revenues increased 29% to $6.6bn over this period.

Full-year net revenues and GAAP net income increased 10% and 13%, respectively.

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How attractive are current investment opportunities in Europe?

Europe has been identified as one of the most favorable regions for investors, seeing high investment activity in the past year. Most of these investments have been through Debt Offering, valued at close to $700 billion. The region has provided attractive investments in a diverse set of companies. Companies who tend to major themes such Digital Media, Cloud, Artificial Intelligence, E-commerce, and Big Data are recording the highest number of deals, with Digital Media recording close to 2,000 deals. However, GlobalData’s whitepaper offers a full view of the market, analyzing less successful or attractive points of investment as well, examining statistics on Equity Offering investments and PE/VC deals. Understand how government agencies for economies around the world use GlobalData Explorer to:  
  • Track the M&A and Capital Raising volumes into their target market
  • Identify the top sectors in the target market attracting the investments
  • For any investment segment, identify the top Investors inside and outside the target economy that are already investing in the Segment
  • Assess and showcase the growth potential for various Industries in the target economy
Don’t miss out on key market insights that can help optimize your next investment – read the report now.
by GlobalData
Enter your details here to receive your free Report.

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