The DOJ’s Visa Lawsuit and What It Could Mean for Borrowers

The Department of Justice sued Visa Inc. on Tuesday, September 24, sending the company’s stock downward by 5.5%. Today, a company in Florida followed up with a visa class action lawsuit, which alleges that visa has monopolized the market, in what could be the start of several copycat class action filings in the near future. What could that mean for consumers and borrowers?

While Visa’s stock price took a hit last month, it’s nowhere near its 52-week low of $228.03 that happened around this time last year. In fact, the company’s highest stock price of the year, $293.07, occurred just one week before the DOJ/Visa lawsuit announcement.

The Justice Department’s lawsuit claims that Visa, the largest company of its kind, illegally monopolized the market for debit cards by strong-arming itself into contracts with fintech providers, which made competing with the company a money-losing battle. Visa is said to have signed contracts that enhanced its power to extract fees and threatened higher costs if rivals competed against it. Other Visa clients and partner banks also fell victim.

The antitrust class action against Visa today states that the company also used size as an advantage on the technology side of card payments. The suit claims that Visa penalized merchants for not using its networks and paying competitors to avoid developing alternatives.

The same day that the DOJ filed its lawsuit, Visa reported allocating an additional $1.5 billion to its litigation fund, suggesting it plans to fight the allegations, with Visa General Counsel, Julie Rottenberg, saying the suit is “meritless.”

What Could the Visa Lawsuit Mean For Borrowers?

Visa Inc. is a massive corporation that’s been under pressure and similar scrutiny for years. So it may seem like this is just another news story that couldn’t affect all of us. And you’d be mostly correct.

However, because of the nature of the Visa lawsuit, there could be some good news in the long-term, such as lower fees overall. In the face of this litigation and the expected run of class action suits to come, Visa could lose a portion of its size advantage and be forced to allow more competition.

More competition and stronger market positions for fintechs and other rivals, in the big picture, could lead to lower costs that can transfer to consumers. How much lower remains to be seen.

In the short-term, it seems, with consumer borrowing at an all-time high, according to last quarter’s Federal Reserve Bank Household Debt and Credit Report, we’ll have to continue to manage our own debt.

Managing Debt In Your Own Financial Life

While the Visa lawsuit could lower some fees over time, the process is likely to take a while. If you have outstanding debt, now is a good time to consider making some financial moves.

Consolidate your debt: Borrowers with several unsecured loans and card debt can often reduce their total monthly cost and interest rate by taking advantage of offerings from the best debt consolidation companies.

Refinance your student loans: If student loans are an issue, refinancing them can help ease the strain. In another setback for student loan forgiveness, today also saw an injunction issued that put widespread relief on hold again. The best student loan refinancing companies can help with lowering your interest rates for your private student loans.

Take advantage of introductory offers: Credit cards, including some related to Visa, often provide introductory rates on the best balance transfer credit cards for existing card debt. While not for everyone, many consumers use these offers to help pay down debt, often at 0% or near 0% interest for limited times.

Consider a budgeting app: The best budgeting apps can help you easily manage your finances and spending in both the short and long-term.