Why Visa Inc. Stock Is Falling Today

Although it is only speculation and our opinion, due to the triple digit market rise on Monday and Visa’s several point fall, it seems that investors are finally warming to the reality of why the bank’s unloaded nearly half their investment in the giant credit card association.

Four months ago, WayTooHigh.com – The Credit Card Interchange Report began posting several advisories on the planned Visa IPO.

This is the most popular recent link, which identifies in Visa’s own words why the world’s largest retail electronic payments network may be more than risky. 

• “Visa’s IPO Is Worth a Close Reading” (via WSJ)
• What is the Federal Reserve’s Role in the Visa IPO?
• How the Fed’s $200-Billion Intervention Indirectly Boosts Visa’s IPO Valuation
• Why Should The Public Bail Out Visa and the Banks?
• Visa Inc. Files 10-K Annual Report, Amends S-1 Registration
• “Visa: Bailing Out The Banks” (NY Times)
• “Should You Join the Visa IPO Craze?” (via Charlotte Observer)
• Visa Inc. IPO Largest in US History; First it was 5, then 10 and Now $18.8 Billion – That’s Some Rich Valuation Appreciation
• Visa’s Inc’s $10,000,000,000 Misguided Hedge From Litigation (WayTooHigh.com)
• Understanding the Word “Insolvency” Is Crystal Clear
• Thousands of Banks Pin Hopes on Visa Inc. to Bail Them Out
• “Significant Victory” Announced Against MasterCard by Class Plantiffs

Want to know more about lead plaintiff ScanMyPhotos.com? Click here and read their daily blog: Tales from the World of Photo Scanning

Visa prices IPO at $44 a share, above expected range, raising a record $18 billion

The lessons of greed by leading financial institutions have not been learned – click here.   

A funny thing happened on the way to “Vegas,” for those readers of the earlier posts, including [“If We Were in Vegas, Our Wager Would Be on Visa’s IPO Not Happening,”]. 

Several weeks ago we began raising the question of whether the Visa IPO would be delayed or derailed.  After the most recent financial market earthquakes, we opined for the latter and with good reason.  We strongly felt that investors would be more risk adverse, pay closer attention to the IPO risk factors and analyze the banks’ need to bail out from Visa. 

However, the historic moves within the past 48-hours by the Federal Reserve by adding liquidity, covering the Bear Stearns takeover and announcing new protocols to lower key interest rates all helped temporarily prop up the financial markets.  Perhaps just long enough to keep the IPO window open for Visa’s thousands of member banks to run for the hills. 

WayTooHigh.com – The Credit Card Interchange Report will be closely monitoring and updating the events of the next few days and beyond.

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Want to know more about lead plaintiff ScanMyPhotos.com?  Click here and read their daily blog: Tales from the World of Photo Scanning

Why Should The Public Bail Out Visa and the Banks?

With millions of families forced to vacate their foreclosed homes due to unchecked greed by the banks and financial institutions – dispatched from their oversight responsibilities, in just two days the public is poised to again bail out the banks.  This just hours after the Federal Reserve handed out billions in public fund to bail out Wall Street.  Now, round two. 

The banks which own Visa, the largest credit card association, are again moments away from scoring another multibillion dollar windfall.  No, they are not getting the funds by raising interchange rates – that is scheduled for April 1st. 

Instead, the pubic is lining up to hand over billions to the thousands of banks looking for their next fix.  This time, the ill-advised investors are not studying the SEC documents and catastrophic risk factors that could lead to Visa’s insolvency.  These are not our words, but Visa’s – click here.

With the record number (nearly three times the previous high) of visitors to WayTooHigh.com – The Credit Card Interchange Report, today signals a shift in philosophy.  Today, more people are being cautioned that if our merchant interchange litigation is successful, it could lead to the demise of Visa.  Or, will the Federal Reserve then step in and refund investor’s losses?

“Eroding Confidence Stings Bank Shares” – IHT

Riddle: What Do Visa and MasterCard’s Interchange Fees, Photographic Film and the Yellow Page Print Directories Have in Common?

Non eco-friendly relics from last century, like photographic film and bulky Yellow Page directories, in our opinion, share something in common with Visa and MasterCard’s interchange fee structure.

Even worse, the billions of bank-mailed credit card solicitation junk-mail sent each year fill up land fills along with billions of plastic charge cards cast-away.  Whether it is Interchange fees, photographic film or Yellow Page print directories, in our opinion, they are all obsolete in today’s high-tech society.

The difference is that consumers and businesses can quickly adopt.  Most have switched from film too digital, and many are switching from print to Internet advertising [Click here for an overview of phone book giant R.H. Donnelley’s quandary].  The manufacturers adjusted too.  Many directory listing companies are offering online solutions. 

And, in our case, retailers like us modified the entire photo business model.  Entrepreneurs are switching from print Yellow Page advertising to Google and other online directory listings. For ScanMyPhotos.com, we were forced to change, and fast. AT&T Real Yellow Pages “forgot” [they literally forget] to run one of our display ads last summer in Central Orange County, California.  These are the legally contracted ads we place every year and were an essential marketing tool for us.Subsequently, in preparing for our new Blog: YellowPage the Dinosaur, we contacted several others in our industry and they share our opinion of the Yellow Page’s demise.  [website: blog.yellowdinosaur.net].As the phone stopped ringing from local customers, we were fortunate that ScanMyPhotos.com also relies on national customers, our website and Blog: Tales from the World of Photo Scanning to spark traffic and new customers.  For complete information on our quagmire see our new Blog: YellowPage the Dinosaur. Our Yellow Page story was just profiled in B to B Magazine, but we are still out the more than one-hundred thousand dollars from lost revenues . Even one of the online directory companies picked up on our predicament and has the ScanMyPhotos.com new customer profile on their site.What does this have to do with our interchange fee battle?

As technology and efficiencies caused oceanic-sized changes to the Yellow Pages and film businesses, Interchange fees continued to rise.  Interchange fees were designed to be cost-based to cover the four-party payment network when we used those antiquated manual credit card imprinters and thick stack of carbon-copy receipts.  Unlike with film and the Yellow Pages, merchants cannot easily switch to other electronic payment networks. The 80% market power exerted by Visa and MasterCard is insurmountable.

Like most merchants, doctors offices and millions of all-sized companies, we are forced to accept Visa and MasterCard – pay their non cost-based rates [$40 billion annually] and even their whimsical fee adjustments.  Another fee adjustment was recently announced, but merchants won’t know the new rates until after the Visa IPO occurs and not until the day the new rates are imposed on April 1^st – April Fool’s Day. These unchallenged and unfair fees are, after all, how we got started with our antitrust litigation in the first place. [Click here to read 2005 The Wall Street Journal article by Wendy Bounds and Robin Sidel]. Back in 2005, both Visa and MasterCard collectively and “coincidentally” were united in sharing the announcement that their signature affinity cardholder interchange fees were rising. This action caused merchants to also be taken on a ride when cardholders paid with their plastic frequent-flier cards. And, they are at it again, with a planned April 1 new rate adjustment.Whether it is film or yellow page directories, we modified our business model. But, when it comes to gallant, anti-competitive, cartel price-fixing, retailers are unable to modify our practices. Photographic film’s demise caused havoc on many business. The Yellow Page ad that AT&T forgot to run for us equally had a detrimental impact.However, with Interchange fees we, like millions of other merchants are all beholden to Visa and MasterCard. The day we stop accepting Visa and MasterCard is the day we are forced to close down, yet we are forced to pay whatever rates they impose.————————————————————————————-

Want to know more about lead plaintiff ScanMyPhotos.com?  Click here and read their daily blog: Tales from the World of Photo Scanning