Visa dominates the lucrative business of processing debit card transactions. Merchants must choose between paying the financial services company’s fees or foregoing 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.