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Illustration: Annelise Capossela/Axios

The Department of Justice antitrust lawsuit against Visa is important, not just for the outcome of a $5 billion fintech acquisition, but for the whole future of the industry.

Why it matters: While there are a lot of financial startups, very few of them are genuinely disruptive. In fact, many of them implicitly rely upon the Visa and Mastercard duopoly. The DOJ wants to ensure that there's still a chance that duopoly could face real competition.

How it works: Visa has a monopoly on debit purchases, and especially online debit purchases, where it has 70% of the market and earns $2 billion per year.

  • Plaid is one of the few companies in a position to develop a rival product — one where consumers could pay for purchases directly out of their bank account, much as they do when they use Venmo.
  • Visa decided to buy Plaid as an "insurance policy to protect our debit biz in the U.S.," in the words of Visa's CEO. That's pretty clearly anticompetitive behavior.

The big picture: It's not just Visa that relies on revenue from debit-card purchases; it's also all the neobanks, such as Chime, Varo, Aspiration, and N26.

  • Chime's CEO, Chris Britt, likes to tell people that he's not a bank, he's a payments company.
  • That means he's fully invested alongside Visa in having access to a continued stream of payments on Visa's rails, where Chime gets a cut of every transaction in a way that might not be the case with a rival product.

The bottom line: Payments tend by their nature to be monopolies. If there's hope for a competitor to Visa, it's good that the DOJ is keeping that hope alive. Even if that threatens the main income stream for other fintechs.

Go deeper

Updated Jan 28, 2021 - Axios Events

Watch: The future of financial inclusion

On Thursday, January 28, Axios' Dan Primack hosted a conversation on financial inclusion in the global economy, featuring Sen. Tina Smith (D-Minn.) and Institute for Women's Policy Research CEO C. Nicole Mason.

Sen. Tina Smith discussed the impact of the COVID-19 pandemic, uneven access to technology, and the role of systemic racism in growing economic inequities.

  • On what she thinks will be the most effective way to move the needle on financial equity: "Raising the minimum wage to $15 an hour...is one of the biggest things that we can do to address the wage inequality and savings potential for people of color in this country."
  • On Democrats' economic goals going into the new administration: "Addressing this kind of discrimination in financial services and creating more opportunities for people of color to get access to banking services, loans, access to capital is a big priority for us as [Democrats] move into the majority."

C. Nicole Mason discussed how job losses during the pandemic reflect existing gender and racial inequities, as well as the disproportionate burden of childcare on women.

  • On the scale of job losses for women: "Since the start of the pandemic, women have exited the workforce at four times the rate of men, so about 11 million women since the start of the pandemic have lost their jobs or exited the workforce."
  • On childcare as an equity issue: "With the pandemic, the burden [of childcare] doubled and tripled...We need a national childcare infrastructure where we keep up childcare as a public good and people can access it regardless of their income or ability."

Axios co-founder and CEO Jim VandeHei hosted a View from the Top segment with Executive Vice President and Chief Executive Officer of Europe, Visa Charlotte Hogg, who discussed digital and financial inclusion as a component of economic equity during the pandemic.

  • "We have to think about inclusion as being digitally, financially included. [From] small businesses who are increasingly important in driving towards a more inclusive recovery and who need to be digitally enabled to participate in that, [to] consumers who for various reasons may be vulnerable."

Thank you Visa for sponsoring this event.

Right-wingers making McCarthy sweat for future Speaker post

House Minority Leader Kevin McCarthy stands with his Republican colleagues outside the House on Nov. 17. Photo: Stefani Reynolds/Bloomberg via Getty Images

Right-wing elements in the Republican Party are complicating House Minority Leader Kevin McCarthy's attempts to become the next speaker of the House should the GOP take back the majority in 2022.

Why it matters: While McCarthy has worked carefully to build trust among the conservatives who tanked his chances at clinching the speakership in 2015, they're still circling ahead of the next Speaker vote in January 2023.

Congress sprints to meet crush of deadlines

Illustration: Aïda Amer/Axios

Congressional leaders have been pushing off vital action for months — and a lot of it will catch up with them in December, which begins Wednesday.

Driving the news: Funding for the federal government is set to expire at midnight on Friday. There are also consequential deadlines related to the debt limit, President Biden's agenda and annual actions like voting on the National Defense Authorization Act.