Visa’s Strategy in Debit Cards Stymied Rivals (NYT)

Watch this Andrew Martin reported New York Times produced video about Visa and MasterCard merchant interchange fees. Profile and article includes Mitch Goldstone, president & CEO, ScanMyPhotos.com

Click here to read article

More on Visa Inc.

Form 10-K for VISA INC.

Visa says might incur “significant” charges in FY09

The Credit Card Fee That Will Fleece You

How Visa and MasterCard Discriminate Against Millions of Merchants

As MasterCard provides an interchange fee limit of $50.00 for service station gasoline fill ups, the question is whether this is just for debit cards, or also for credit card transactions? Then, with many card limits of about $75.00, are motorist forced to resubmit their card to top off their tank and thus ring up even greater interchange fees? As for Visa, will they also be imposing an interchange fee limit on credit cards too?

While pleased to see that Visa and MasterCard are reacting to merchant revolts against the two giant card associations, it was especially consoling to notice that the Visa debit card limit was announced just hours after our planned rally against them. Nice timing, Visa!

The problem is that restructuring only a few interchange fees provokes even more questions. There are millions of retailers coerced to pay these supra competitive fees, yet the only relief now are for service stations, and for only gasoline purchases. What about our ScanMyPhotos.com and the millions of other retailers? We all want relief and if Visa and MasterCard can limit fees at the pumps, why not everywhere? The answer to this rhetorical question is that they are giant cartels that have a monology and can do whatever they want…. until now.

The interchange fee limits at the pumps do not address the issues of other skyrocketing inflationary costs on other products and services.

 

Two Chinese Companies [Government] Bails Out The Banks Through Visa Inc. Shell Game

If you watched 60 Minutes on Sunday evening, you heard a frightening scenario that the Chinese government might be gaining unreasonable power, influence and control of U.S. businesses, especially in the financial services sector.

According to the Teshreen Press and Publishing Foundation, two Chinese nationals now own ~$400,000,000 in Visa, Inc., which means that those two recent checks totaling nearly 1/2 billion dollars to the banks – which owned the giant credit card processing cartel – was paid off by China.  This raises so many concerns, from attention towards Visa’s Olympic sponsorship, how interchange merchant fees are structured in China, to questions of whether Visa and its member banks might gang up with China to wound the sovereignty of Taiwan?

We wonder whether Visa Inc cardholders understand these ramifications and the Chinese connection?

• China Life purchased nearly ~300 million dollars in Visa Inc.

• China’s Sovereign Wealth Fund also bought ~$100 million dollars in Visa Inc.

Click here for more information.

[NEWS UPDATE: Olympic Torch Snuffed Out In Paris]

 

“Visa’s IPO Is Worth a Close Reading” (via WSJ)

Herb Greenberg reports in The Wall Street Journal on March 22 [Page A11, subscription required] on what we have long been mentioning – The Visa IPO risk factors. 

Unfortunately, it wasn’t until after the drunken jubilation subsided that investors are beginning to understand what is at stake.  We posted the Visa Inc. SEC filing and risk factors on Dec 22.  Why was the media as negligent as investment advisers and underwriters in better not explaining the facts behind the largest IPO in our nation’s history?  Was it greed, or the rush to get the deal done at all costs.  Now that the party is over and that window of opportunity to complete the IPO is sealed, sobriety comes in a few weeks, when the billions in Federal Reserve loans are called.   

Click here to read the Herb Greenberg WSJ article.

Excerpts:

• “Investors generally overlook “risk factors,” as they are called. These can be found in all IPO prospectuses and 10-K annual reports filed with the Securities and Exchange Commission. This is where the company is supposed to bend over backwards to tell you where the booby traps might be.”
• “Much of it is boilerplate, but Visa’s warnings go beyond mere boilerplate to some specific issues that could very well spook investors if and when they ever make it into the headlines.  Consider, for example, that the first eight pages of its risk factors are devoted to legal and regulatory matters. Most companies usually start with business risks, but with Visa — and MasterCard — the lawyers (and some politicians) have had a field day.  Perhaps the stickiest concern has to do with lawsuits, as Visa puts it, over the amount of money the credit-card companies charge merchants.”
  
• 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
key point: “Failure to successfully defend or settle the interchange litigation would result in liability that to the extent not covered by our retrospective responsibility plan could have a material adverse effect on our results of operations, financial condition and cash flows, or, in certain circumstances, even cause us to become insolvent.” 

“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

Why the Visa Inc. IPO Might be Delayed for Shelved?

As WayTooHigh.com – The Credit Card Interchange Report prepares to post our 1,000 news and commentary update since 2005 – back when we launched what was the first of fifty separate antitrust complaints against Visa, MasterCard and major banks – there are nearly 1,000 prior posting that paint a tapestry of reasons why the banks’ scheme to unload part of their holdings in Visa might not happen.

A Look into Visa’s Trojan Horse IPO Scheme

Today, a reporter suggested we should be happy that Visa Inc. is setting aside a $3 billion reserve for our litigation. No, not really.

The credit card giant is playing an unfriendly game in its pursuit of detachment from their legal liability for illegal price-fixing by agreement.  If you step back and read several of our preceding comments, you will notice that when first announced, many hinted that Visa Inc. could anticipate raising $5 billion, then it was $10 billion. Now, it is nearly $19 billion. 

Was this caused by unearthly market conditions, inflation or because they were simply padding the amount of money they hope to raise to cover their legal liabilities?The worry is that they could simply use investor proceeds to fund settlement of our litigation and then continue raising merchant interchange rates to more than cover the lost revenues. To us, that is as unfair as are their interchange fees.A review of the earlier credit card litigation identifies that for merchants and consumers, the fair market economy is still broken and there still is no real electronic payment competition. Visa and MasterCard’s cartel-like pricing structure still precludes a real resolution to interchange fees. From the preceding resolution, Visa and MasterCard simply raised other rates to adjust for their penalties, thus more than paying for their fines.

  

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

Visa’s Inc.’s Planned IPO & MasterCard’s Earnings Recap

According to Robin Sidel’s Feb 1st WSJ article on MasterCard Inc’s increase in profits [click here], about 75% of the world’s second largest credit card association comes from electronic “payment processing fees that are paid by merchants and card issuers.”

Also noteworthy was the report that Visa Inc.’s planned IPO might occur within sixty days, although no price or date has yet been announced.

MasterCard’s profits during the 4th quarter rose to $304.2 million, or $2.26 a share, from $40.9 million, or 30 cents a share, a year earlier.

  

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

Interchange Fees are Obsolete as VHS Video Tapes

During the holiday season, look around.  Can you find any VHS cassettes to record television programs on?  How about super-8mm movie film?  8-track tapes?  3 /12″ floppy discs?  Catching on?

Merchant interchange fees are one of the few holdouts from the pre technology explosion, from before TiVo, MySpace, Youtube and the iPhone.  The electronic payment network is today what computer storage devises were years ago.   With consumers increasingly relying on their computers to safe keep their valuable digital libraries, Western Digital’s My Book storage system provides users a safe place to secure up to one terabyte (1 TB) of digital content.  In the mid-1990’s that hardware would cost about a million dollars and fill an entire room, today it is under $500 and is the size of a few cell phones.   With “Moore’s Law”, technology is getting faster and prices cheaper.  Except, when you have unbridled market power and control a system that is obsolete.  It is like a drug addict who only knows how to stay in a daze. 

But, we are awaking Visa and MasterCard and reminding them that their once impenetrable interchange fee fiefdom is on the verge of distinction.  Other countries have got smart and demand rates be lowered, in some cases to a tiny fraction of those fees in the U.S., even though our nation is among the most technology advanced, our communications infrastructure should mean it costs less to transmit data, and third-world fraud rates have to be higher, yet they too pay a tiny fraction of our near record merchant interchange fee prices.  Technology today is so super-fast, just like our high speed ScanMyPhotos.com picture scanning – we cannot help but lower prices. 

Even though the banks are reporting huge problems from its mortgage mess, they would not be allowed to wield their anti-competitive power to artificially hold up what are now obsolete fees to help cover their other mistakes.  We understand that only about 13% of all interchange fees are used to actually cover the transactional costs. 

[Commentary: WayTooHigh.com] 

Returns After “Black Friday” Cause Losses For Retailers

The 40-billion dollar merchant interchange hidden tax is a mystery to many, and few understand how these fees work. 

A little known fact is that when shoppers return an item, the retailers can be out the interchange fee.  Depending upon the payment processing contract, reimbursments for the electronic charge payment do not always occur, even though a full refund to consumers are applied during returns.  Think of the billions of dollars in merchandise returns after “Black Friday,” traditionally the busiest shopping day of the year, following Thanksgiving.  Visa and MasterCard, along with its thousands of member banks’ motto should be “thanks for giving, but we might not refund your interchange charges for returned goods and services.”

[Source: WayTooHigh.com]