“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

Visa Inc. $45 Billion Market Value Still $5 Billion Under Potential Liability

[Click here for March 19, AP story on Visa Inc. IPO by Michael Liedtke]

Based on Visa Inc’s. closing stock price after its first day of trading (down by more than 12-points from its intra-day trading high of $69 a share), the giant credit card association’s market value is about $45 billion.  The stock was up just $1.50 a share from its trading-day low of fifty-five dollars.  Even so, the credit card cartel’s valuation is still $5 billion shy of the reported $50 billion potential  legal liability, according to Legal Times.  As with MasterCard, the antitrust liability could lead to the company’s insolvency, according to Visa’s SEC filing.

While Visa might be somewhat insulated from credit problems facing the banks, which still own nearly half the company, they along with MasterCard are very much in the cross-hairs of the merchants who are forced to accept the card cartel’s dominant 80% market power. 

Even as a new group of owners join the thousands of member banks by stepping onto the field, the years of antitrust price-fixing charges remains with the new and prior owners.

“Why the Visa IPO is So Hot” (via MSN: MoneyBlog)

Click here to read Anthony Mirhaydari’s report in MSN’s MoneyBlog)

Excerpt:

• “…And there are some legal issues too: Since 2003, for every dollar of revenue Visa generated, 28 cents was paid out in settlements. Most of the litigation centers on the interchange rates Visa charges to merchants on each transaction and various other antitrust issues.”

Shareholders Take Visa; Banks Run With $10,000,000,000 Payday

Because the new Visa Inc. shareholders remain hypnotised by the market success of MasterCard’s IPO, here are some leading morning-after profiles about why the banks bailed on Visa, cashed out $10 billion, plus another $3 billion for litigation reserves. 

Visa is the richest IPO ever in U.S. history, but for who?

Did you know that the initial initial public offering was expected to yield only $5 billion?  And, after deducting the legal reserves, the banks and the underwriters proceeds that is about all that might be left.

“At Stake is More Than $50 Billion if the Merchants are Successful” (Legal Times)

Visa Inc. IPO Valuation – $74 a share?

“[B]anks Also Stand to Shed Some Liability” (The Charlotte Observer)

“Visa’s Lucrative House of Cards” (SF Chronicle)

Twilight Zone: The Movie, Visa and MasterCard Style

UnfairCreditCardFees.com

Visa Inc. IPO Largest in US History; First it was 5, then 10 and Now $18.8 Billion – That’s Some Rich Valuation Appreciation

“Significant Victory” Announced Against MasterCard by Class Plantiffs

 “Visa’s initial offering expected to fetch $5-billion”

Visa’s Inc’s $10,000,000,000 Misguided Hedge From Litigation

“Visa’s IPO Use of Proceeds Plan and Interchange Overview

Visa Inc. Files 10-K Annual Report, Amends S-1 Registration

How the Fed’s $200-Billion Intervention Indirectly Boosts Visa’s IPO Valuation

“Will Visa IPO Deter Antitrust Lawsuits?” (Financial Week)

“IPO View – Visa IPO Hit by Unexpected Snag–Recession Fears” (Reuters)

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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

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

“Visa Set to Charge” (via Brifing.com)

Click here to read the Jeffrey Ham report in Brifing.com

Excerpts:

1. “While many companies use the proceeds of IPOs to build their balance sheet and fund expansion, Visa is using $3 billion of the capital raise to fund litigation expenses.  Both Visa and peer MasterCard (MA) have been hit with lawsuits related to interchange fees charged to merchants for card transactions.”
   
2. “Those interchange fees fuel Visa’s and MasterCard’s profit engine.  Neither company issues credit or cash to consumers.  Rather, they process the transaction and charge merchants a fee for conducting the sale.”

“The Visa IPO” (Prospective from CreditSlips.com)

CreditSlips.com has a detailed overview and discussion of the Visa IPO at this link.

Excerpts:

1. “This market seems like terrible timing for an IPO, although for liquidity-strapped banks, the IPO could be a much-needed source of cash.”
2. “A major factor driving Visa’s IPO is antitrust liability. It is Visa’s litigation exposure… and, on a much larger scale, the potential antitrust liability connected to interchange and merchant restraint litigation and the possibility of legislative changes to interchange.”
3. “Recent developments on interchange and merchant restraints don’t bode well for Visa. The European Union, Australia, Brazil, Colombia, Germany, Honduras, Hungary, Israel, Mexico, New Zealand, Norway, Poland, Portugal, Romania, Singapore, South Africa, Spain, Sweden, Switzerland and the United Kingdom have all moved against or begun to regulate interchange fees and the merchant restraints that shield interchange from normal market pressures. US regulators have been behind the curve on this, but there’s now interchange legislation pending in several states (none of its particularly aggressive—at worst prohibiting interchange on sales tax) and a bipartisan bill was recently proposed in the House that would create as special administrative law judge panel to oversee interchange rate arbitration and set rates if necessary.”
4. “The Visa IPO creates a company with an unusual 3 stock-class capital structure that can only be explained as an antitrust shelter. Like MasterCard’s post-IPO structure, the Visa post-IPO capital structure is designed to permit banks to retain effective control over the company without holding a majority of shares and giving a veneer of independence to decisions about the setting of the interchange rate and network rules, in short plausible antitrust deniability. The structure also reduces banks’ antitrust exposure going forward, albeit at the cost of some of Visa’s revenues, but as a mutual-type member association, Visa was not designed to be a profit center in the first place.”

“Visa Set for Massive IPO Amid Financial Storm” (via Channel NewsAsia)

Click here to read article.

Excerpt from Channel NewsAsia:

• “Credit card giant Visa was set to launch trading Wednesday in the largest share offering in US history, even as stock markets are being tossed by worries about a mushrooming financial crisis.”
• ” Yet Visa’s IPO appears headed right for a financial market storm with investors battening down the hatches amid worries of a credit crunch that could hurt many firms, especially in the financial sector.”
• “The move comes at a time when IPOs are few and far between, especially in the financial sector.”
• “‘With concerns surrounding the slowdown in the economy, weakness in the financial sector, the skyrocketing price of oil, and the plummeting dollar, it’s not surprising to find that the initial public offering market has pretty much dried up,'” said Jocelynn Drake, analyst at Schaeffer’s Investment Research.   “Who would want to issue their shares in this market? Only a behemoth such as Visa.”

“Visa Files $10 Billion IPO” (From Nov 10, 2007)

If you thought the crashing dollar caused energy prices to increase 70% in the past few months, that’s nothing.  The greed and mismanagement at the banks boast an even larger tale. In just four-months, the banks nearly doubled their valuation estimates for Visa Inc.  We just came across this November article describing the $10 billion Visa  IPO plan, which is now hovering closer to $20 billion. 

• 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)

Visa Inc. IPO Update

Although it is just our opinion that the Visa IPO will be derailed, we still assert that potential investors are still hypotized with the same exuberance that Bear Stearns’ chairman, James Cayne possessed when playing in the recent North American Bridge Chapionship in Detroit. 

According to The Wall Street Journal, Mr. Cayne was away from a cell phone and email during last summer, during the firm’s impending fiscal crisis.  Even our company, ScanMyPhotos.com is always accessable with iPhone, 24/7 Live Support and other tools to provide instant access.

In the case of Mr. Cayne, as quoted in the Journal [“Cayne on Golf Links, 10-Day Bridge Trip Amid Summer Turmoil”] by Kate Kelly [Nov 1], “[a]ttendees say Mr. Cayne has sometimes smoked marijuana at the end of the day during bridge tournaments.”  In the case of what might turn into an oversubscribed Visa IPO, unless Visa pulls the plug, we can’t help but ask what the new shareholders are also smoking? 

The IPO, along with its risk factors represents a new vanguard of greed in the eye of the financial markets’ tornado-like storm.

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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

“Visa Expected to Buck Trend” (via WSJ)

WSJ reporter, Lynn Cowan writes on March 17th that the still expected Visa IPO “is expected to be a hit with investors.”  Is her article just wishful thinking?  After all, it is St. Patrick’s Day!

Will Visa IPO Hit the Wall, be Delayed or Cancelled?

Today’s newsline:

• Bear Stearns shares fall 47%.
• 28-days of secured funding from Fed and JPMorgan Chase for Bear Stearns [What’s up with this magic 28-days? First, the Fed extended credit to prop up the mortgage loans and now this.  Wonder if it’s all just to make sure the Visa IPO’s bank bailout doesn’t hit the skids?]
• Alan Schwartz, Bear Stearns’ CEO says, according to Reuters: “our liquidity position in the last 24 hours had significantly deteriorated.”
• Consumer sentiment slips in March to 16-year low.
• Fears big U.S. bank is in trouble.
• And, the #1 reason to worry: “President Bush Plans Bullish Speech On Economy.”

How the Fed’s $200-Billion Intervention Indirectly Boosts Visa’s IPO Valuation

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

“House Bill Could Cast a Cloud Over Visa I.P.O.” (NY Times)

Click here to read March 13th article, edited by Andrew Ross Sorkin from the New York Times.

How the Fed’s $200-Billion Intervention Indirectly Boosts Visa’s IPO Valuation

28-days to a Market Nightmare

(click herefor update from Ye Xie and Gavin Finch at Bloomberg on “Concern Fed Package Wont Suceeed“)

Tuesday’s $200-billion infusion in Treasury securities did more than subsidize the market’s 400-point Dow rise (3.6%), it indirectly is fortifying investor confidence in advance of next week’s planned Visa IPO. It is also a maneuver to briefly sustain market perceptions that the banks are again fiscally healthy.

A weakened stock market would have spelled trouble for getting the Visa, Inc. IPO off the ground. Without this help from the Federal Reserve to the banks, the stock market’s glumness would overshadow what is planned as the nation’s largest initial public offering ever.  Instead, the Fed designed this liquidity quick-fix that will last just 28-days- coincidentally, just long enough to see the Visa IPO get funded.

What happens on April 9^th, when the $200-billion bailout is called back?

The billions in increasingly valueless home loan packages will again be an issue in 28-days, but just after the investors’ sentiment is uplifted by this artificial market manipulation.  As the banks rush to unload giant portions of their ownership in Visa Inc. investors should look closely at the real fable behind this Fed action.

• What happens to the equity market and the post-Visa IPO valuations then?
• What happens next month to the valuation and liquidity of the mortgage-backed securities that are being held as collateral?
• The banks’ balance sheets will be mellowed and ripened with billions of dollars gained from transferring part ownership of Visa Inc. into public hands.
• The same Visa, Inc. IPO risk factors remain, even after the Fed’s funding prop.
• In 28-days, after the Fed’s temporary fix by buying mortgage securities that others don’t want expires, what do the new Visa Inc. Shareholders do after the banks have their money?

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

“Extra Credit for Visa’s IPO” (BusinessWeek)

Click here to read the March 10, Ben Steverman BusinessWeek article on the Visa IPO.

The Credit Card Fair Fee Act: What Does It Mean to Consumers and Retailers?

Accredited media are invited to contact Mitch Goldstone, President & CEO of ScanMyPhotos.com, the lead plaintiff in the Payment Card Interchange Fee and Merchant Discount Antitrust Litigation against Visa, MasterCard and leading member banks of the two giant credit card associations. 

For a detailed history and prospective on the interchange battle, issues pertaining to the Visa IPO and commentary on the new legislation introduced by the US House Judiciary Committee – to enable merchants to negotiate interchange fees – Mr. Goldstone is available to share his prospective. 

Mr. Goldstone is an entrepreneurial expert who co-owns a nationwide Ecommerce and retail business based in California since 1990.  He co-edits WayTooHigh.com – The Credit Card Interchange Report and leading, well-known personality in this multi-billion dollar merchant interchange battle. 

To schedule an interview, accredited media may email: Goldstone (at) 30minphotos.com.

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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

“As IPO Looms, Visa’s Outside Counsel [Arnold & Porter] See Litigation Bonanza” [Law.com]

Arnold & Porter.  

With millions of merchants, the fresh eyes of Washington, the European Union, nation’s around the world, and entrepreneurs like us, the question is: how can Visa, MasterCard and its member banks explain the annual $40,000,000,000 hidden tax that (we assert) is based on illegal price-fixing by agreement and unbridled collusion? 

Even more questions about Visa’s IPO-planned multi-billion dollar bank bailout are raised from the March 7th Legal Times article by reporter Attilla Berry.  Click here to view.

Even the gigantic-sized billable hours for law firms like Arnold & Porter pale in the shadow of the potential liability, which was reported to be “more than $50 billion if the merchants are successful,” according to the article.

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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

“Visa Likely to Pale Versus MasterCard” (via Barron’s)

Click here to read overview of article.

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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

“Should You Join the Visa IPO Craze?” (via Charlotte Observer)

Click here to read the Sunday, March 2, article in The Charlotte Observer. 

It included a listing of considerations before investing in the pending Visa IPO which was written by reporter Christina Rexrode, but was absent of a giant risk factor.  Among the pros and cons, there was no mention of the merchant interchange litigation with threatens the continued operation of the giant credit card association, and as described in its SEC filing, might lead to insolvency. 

Read the below 998 WayTooHigh.com posting for more reasons why this might not be the smartest of investments, other than for the thousands of banks which are racing to bail out.

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.

Visa and MasterCard’s Member Banks’ Weak Assessment of Interchange Litigation

If you thought the thousands of member banks failed miserably in how they extended billions in risky housing loans, that could end up being an understatement on the leadership in their executive suites.

Take a look at the banks plan to partly bail out from their Visa investment by using the expected IPO in an attempt to distance themselves from the merchant interchange litigation.  Should the Visa IPO occur this month as planned, and we still think it might not – or be delayed due to market conditions and other factors – the real fiscal liability is fully understated. 

Visa’s SEC filing explains that they plan to set aside $3.0 billion for its legal liability, but you would think that the real hit to the banks’ would be far greater.

Here is why:

In our opinion, any merchant interchange settlement would include removing or substantially reducing their current $40 billion annual hidden tax on retailers and consumers.  Market analysts and several financial reporters have been explaining that the Visa Inc. IPO investment is solid if the legal liability  is diminished.  However, they all fail to equally assess the impact on the credit card association’s banking cartel to adjust for a diminished source of income from their anti-competitive and price-fixing interchange scheme.   

What Do Visa and AT&T Have in Common?

While financial writers are explaining that the planned Visa Inc. IPO will be nearly double that previously all-time high public offering by AT&T.  There is also something much more ominous that the two have in common and should not be overlooked.  Our antitrust litigation against Visa, MasterCard and major banks is also the largest antitrust case since the AT&T breakup; not very good company to keep.

Some talk by the financial media suggests that the thousands of banks which co-own Visa might be hoping for a multi-billion dollar settlement [they are planning to hold $3 billion in reserves].  But, the much larger payout is the $40 billion in annual merchant interchange fees that consumers and merchants are forced to pay.  We think any settlement will include either the termination of or significant reduction in these obsolete electronic payment fees, and thus even more billions in revenues that would no longer be sent to the banks, but rather retained by American consumers.

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

“[B]anks Also Stand to Shed Some Liability” (The Charlotte Observer)

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According to Christina Rexrode’s Feb 27 The Charlotte Observer article, the thousands of banks that own Visa will adjust their valuation once the adjusted post-IPO market value takes effect.  This means giant windfalls for the banks. 

Abstract of Key Points From the Article

• If the public offering goes through, the banks also stand to shed some liability.
• The banks hope that taking Visa public will get it off the hook in those lawsuits, according to some analysts.
• Gwenn Bezard, research director at Boston’s Aite Group said: “[the banks] are offloading the risk to someone else — investors.”
• Visa will set aside about $3 billion of the money it raises in a stock offering for litigation costs, according to [their filing statements].
• When MasterCard went public in 2006, the lifting of legal liability from the issuing banks was the deal’s main driver, said Eric Grover of Intrepid Ventures. …”Absent the legal liability, I don’t believe MasterCard would have gone public.”   “It’s a bit of a Russian roulette here…”  “If it were to go to trial, there’s a nonzero chance of a catastrophic event.”

[Click here for recent recommendation against MasterCard’s IPO]

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

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 Lucrative House of Cards” (SF Chronicle)

Click here to read the Carolyn Said, Feb 26th San Francisco Chronicle article about Visa’s planned IPO.

From the article, this is one of the reasons the annual $40 billion hidden tax on retailers and consumers should be close to zero.  Today, most electronic payments are instant, cost-effective and high-tech, no more carbon-copy paper receipts that need to be manually cleared. Then again, think of check writing and even those processing fees are without interchange fees too.  The banks will explain that limiting interchange fees in today’s modern world would be price-fixing, and they should be very familiar with that term, because that is what they are doing. 

• When Visa was established, the card association was without sophisticated, cost-effective computers.  “card transactions were all processed on paper receipts from hand-swiped machines”.
• “At one stage, there were literally gymnasiums full of unrecognized receipts people had to sort through, [i]t was an absolute nightmare.”
• “Focusing on ‘digital money’ was the key to revolutionizing the card. But turning that into reality involved major negotiations.”

  

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

Thousands of Banks Pin Hopes on Visa Inc. to Bail Them Out

Here we go again.  But, this time the ride is pitched at a much steeper angle than the previous MasterCard IPO.  The thousands of banks which partly cashed out when they unloaded about half of their MasterCard investment are now poised to go full throttle and launch what will be America’s largest IPO ever. 

The numbers are big, as is the potential liability.  According to Visa’s SEC flings, if our antitrust litigation against their collusive price-fixing practices gains momentum, Visa Inc could become insolvent. 

During the following weeks, we will be closely following and posting regular updates and commentaries on the IPO and call attention when hype gets in the way of facts.

Click here for latest Bloomberg update by Elizabeth Hester

Click here for an update on out complaint against MasterCard’s IPO.

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

“Significant Victory” Announced Against MasterCard by Class Plantiffs

A publicly filed Report and Recommendation on Feb 12 from Magistrate Judge James Orenstein is recommending to Judge Gleeson that the Court deny MasterCard’s motion to dismiss the Class Plaintiffs Supplemental Complaint that challenges MasterCard’s reorganization and IPO.  

[Click here to view the Report and Recommendation].

In our opinion, as Class Plaintiff, this is a significant victory as it undermines MasterCard’s legal and business strategy of attempting to avoid antitrust liability by transforming itself into a “single entity” immune from Section I of the Sherman Act. 

We have written in depth on this topic ever since MasterCard launched its plan to transfer liabilities through a questionable public offering.  While there are other remedies beyond overturning the MasterCard IPO, the situation is similar to those now faced by Visa Inc and its nearly identical planned IPO, which we now think could be modified to address these issues and even be deferred or rescheduled.  [See Risk Factors].  We expect that yesterday’s Report and Recommendation could minimally have a materially negative impact on Visa’s IPO pricing. 

Selected highlights from the Report and Recommendation 

• Background: In their First Consolidated Amended Class Action Complaint, filed on April 24, 2006, the merchants and trade associations that comprise the Class Plaintiffs alleged sixteen antitrust claims against a variety of networks and banks arising from those defendants’ use of fees and rules that enable the merchants to accept credit and debit cards as forms of payments for the goods and services their customers purchase. 
  
• [T]he plaintiffs allege that the IPO fundamentally altered MasterCard’s structure and operations, as well as the relationships between and among itself and the Banks, in ways that offend federal antitrust laws as well as New York State’s prohibition against fraudulent conveyances. 
  
• Before the IPO, the banks that made up the membership of the MasterCard consortium completely controlled the network: they owned all of its shares and populated its Board of Directors and other governance committees.
  
• The plaintiffs assert that it [the IPO] was to avoid such liability that MasterCard’s banks determined to transform the consortium into a public company that would qualify as a single entity; however, in doing so, the plaintiffs contend that the banks sought only to divest themselves of enough participation in MasterCard to avoid antitrust liability, without losing their ability to engage in anti-competitive conduct. Id. 74-75. In making that allegation, they note that MasterCard publicly described one expected advantage of the IPO as being insulated against “legal and regulatory challenges involving our ownership and governance.” 
  
• The Class Plaintiffs contend that the net effect of these changes is to create the appearance but not the reality of a single entity, and thereby improperly to insulate MasterCard from Section 1 liability for what amounts to a continuation of its member banks’ continued unreasonable horizontal restraints of commerce.
  
• I conclude that the IPO resulted in both MasterCard and the Banks making an acquisition that is properly subject to scrutiny under Section 7. First, the Banks Acquired stock in the new MasterCard entity, and that acquisition is not shielded from liability simply because it was paid for with arguably more valuable shares of the old entity. Second, MasterCard acquired assets from the Banks – namely, their shares of the old MasterCard entity and certain associated rights – and that acquisition is not shielded from liability simply because the assets can also accurately be described as MasterCard’s own stock rather than “the stock … of another person
  
• … [T]he plaintiffs assert that the rules governing transfers and ownership of the new classes of MasterCard shares will concentrate effective control of the new entity in the defendants’ hands. Those rules ensure that the banks that were members of the old MasterCard consortium will retain a substantial economic interest – 41 percent ownership – in the new entity. Combined with ten percent ownership share guaranteed to the new MasterCard Foundation, it is impossible for outsiders to obtain a majority stake in the company. In addition, the restrictions on governance rights – including the ownership qualifications and veto powers associated with Class M shares and the limitations on voting rights available to public investors – further ensure that no outsider can gain enough power to operate MasterCard in a way that might be more competitive but less profitable for the banks.
  
• … Given the plaintiffs’ plausible allegations about the characteristics of the relevant market and the effects of the acquisitions at issue, I conclude that the Complaint sufficiently pleads that the agreements leading to the IPO will probably result in a substantial lessening of competition. Combined with my earlier conclusion about the form of the acquisition, I further conclude that – with respect to both MasterCard’s alleged acquisition of assets from its member banks and the Banks’ acquisition of stock in MasterCard – the plaintiffs have identified, if not yet sufficiently pleaded, a viable claim under Section 7 of the Clayton Act.

 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

“Visa IPO Hit by Unexpected Snag–Recession Fears” (Reuters)

Click here to read Reuters article.

Stock Market Meltdown… Visa’s IPO Mess… BAC Quarterly Profits Down 95%… Will Interchange Fees be Lowered?…

The banks must be in full throttle panic. 

If you thought that it could not get worse than Bank of America (defendant in our litigation) reporting its quarterly profit fell by 95% and had trading losses of more than $5 billion, it did. 

It potentially just got much worse.

When the U.S. markets open Tuesday morning, investors will recognize that the financial institutions’ latest flotation tool – unloading part of their Visa investment and trying to potentially pass off the litigation liability onto public hands – has become much less attractive. 

Has their liquidity just been shattered?

If you thought the billions in bailout dollars to the banks was a huge chunk of change, just study our 931 prior WayTooHigh.com posts.  Our multi-billion dollar merchant antitrust litigation – as we battle the banks and MasterCard and Visa over their years of alleged illegal, anticompetitive price fixing is impacting all consumers and merchants.

One news report indicated that the current bank bailout will be about $40 billion, an interesting amount, as it nearly parallels the annual bill that consumers and retailers are forced to pay to the card associations’ member banks each year.$40,000,000,000 is a great deal of money, especially when you multiply it over many years.

With the stock market meltdown, we cannot help but pause to reflect on the banks’ most recent billion-dollar planned bailout by cashing out part of their ownership in Visa.  Will the IPO move forward, or be shelved due to market conditions?  If so, think of the additional lost revenues to the banks; the IPO valuation must be much lower today than initially forecast.

WILL INTERCHANGE FEES BE LOWERED?

We guess that Tuesday’s market reactions will force more interest rate reductions. Why then aren’t Visa and MasterCard’s member banks also following along and lowering their merchant interchange fees too?

There are already calls for the U.S. Federal Reserve to suspend the pending market free-fall and change investor psychology by lowering interest rates a full 1.0 percent.  We know where an additional $40 billion could come from to immediately upright the economy.  Perhaps the presidential candidates will share our view too.

 

 

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

Visa Inc. Files 10-K Annual Report, Amends S-1 Registration

Click here to view report.

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.”

Points of interest from the 10-K Report:

1. “Interchange represents a transfer of value between the financial institutions participating in an open-loop payments network such as ours. On purchase transactions, interchange fees are typically paid to issuers by acquirers in connection with transactions initiated with cards in our payments system. We set default interchange rates in the United States and other regions. In certain jurisdictions, interchange rates are subject to government regulation. Although we administer the collection and remittance of interchange fees through the settlement process, we generally do not receive any portion of the interchange fees. Interchange fees are often the largest component of the costs that acquirers charge merchants in connection with the acceptance of payment cards. We believe that interchange fees are an important driver of system volume.”

2. “As the volume of card-based payments has increased in recent years, interchange fees, including our default interchange rates, have become subject to increased regulatory scrutiny worldwide. We believe that regulators are increasingly adopting a similar approach to interchange fees, and, as a result, developments in any one jurisdiction may influence regulatory approaches in other jurisdictions. Interchange fees have been the topic of recent committee hearings in the U.S. House of Representatives and the U.S. Senate, as well as conferences held by a number of U.S. federal reserve banks. In addition, the U.S. House of Representatives has passed a bill that would commission a study by the Federal Trade Commission of the role of interchange fees in alleged price gouging at gas stations. Individual state legislatures in the United States are also reviewing interchange fees, and legislators in a number of states have proposed bills that purport to limit interchange fees or merchant discount rates or to prohibit their application to portions of a transaction. In addition, the Merchants Payments Coalition, a coalition of trade associations representing businesses that accept credit and debit cards, is mounting a challenge to interchange fees in the United States by seeking legislative and regulatory intervention.”

3. “Interchange fees and related practices also have been or are being reviewed by regulatory authorities and/or central banks in a number of jurisdictions, including the United States, European Union, Australia, Brazil, Colombia, Germany, Honduras, Hungary, Mexico, New Zealand, Norway, Poland, Portugal, Romania, Singapore, South Africa, Spain, Sweden, Switzerland and the United Kingdom. In certain countries, such as Australia and Mexico, interchange rates have been adjusted in anticipation of, or in response to, government regulation.”

4. “Risk Factors—Legal and Regulatory Risks—The payments industry is the subject of increasing global regulatory focus, which may result in costly new compliance burdens being imposed on us and our customers and lead to increased costs and decreased payments volume and revenues,” “—Interchange fees are subject to significant legal and regulatory scrutiny worldwide, which may have a material adverse impact on our revenues, our prospects for future growth and our overall business”

5. “A finding of liability in the interchange litigation may result in substantial damages.

   Since 2005, approximately 50 class action and individual complaints have been filed on behalf of merchants against Visa U.S.A., Visa International, MasterCard and other defendants, including certain Visa U.S.A. member financial institutions, which we refer to as the interchange litigation. Among other antitrust allegations, the plaintiffs allege that Visa U.S.A.’s and Visa International’s setting of default interchange rates violated federal and state antitrust laws. The lawsuits have been transferred to a multidistrict litigation in the U.S. District Court for the Eastern District of New York. The class action complaints have been consolidated into a single amended class action complaint and the individual complaints are also being consolidated in the same multidistrict litigation. A similar case, filed in 2004, is on appeal by plaintiffs after having been dismissed with prejudice, and has not been transferred to the multidistrict litigation.”

6. “The plaintiffs in the interchange litigation seek damages for alleged overcharges in merchant discount fees, as well as injunctive and other relief. The plaintiffs have not yet quantified the damages they seek, although several of the complaints allege that the plaintiffs expect that damages will range in the tens of billions of dollars. Because these lawsuits were brought under the U.S. federal antitrust laws, any actual damages will be trebled and Visa U.S.A. and/or Visa International may be subject to joint and several liability among the defendants if liability is established, which could significantly magnify the effect of any adverse judgment. The interchange litigation is part of the covered litigation, which our retrospective responsibility plan is intended to address; however, the retrospective responsibility plan may not adequately insulate us from the impact of settlements of, or judgments in, the interchange litigation. 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. In addition, even if our direct financial exposure were covered by our retrospective responsibility plan, settlements or judgments involving the multidistrict litigation could include restrictions on our ability to conduct business, which could increase our cost of doing business and limit our prospects for future growth

7. The retrospective responsibility plan depends, in part, on the timely completion of our proposed initial public offering, and if we are unable to close our proposed initial public offering in a timely manner, we may have insufficient funds to pay settlements of, or judgments in, such litigation, which could materially adversely affect our results of operations, cash flow and financial condition.”

8. “Multidistrict Litigation Proceedings (MDL)

   In fiscal 2005 and 2006, approximately fifty lawsuits—most of which were asserted as purported class actions—were filed on behalf of merchants who accept payment cards against Visa U.S.A., Visa International, MasterCard and other defendants. Plaintiffs allege that defendants violated federal and state antitrust laws by setting interchange rates (among other claims, as described below). The suits seek treble damages for alleged overcharges in merchant discount fees, as well as injunctive and other relief.

   On October 19, 2005, the Judicial Panel on Multidistrict Litigation issued an order establishing a MDL in the Eastern District of New York. The Honorable John H. Gleeson was assigned to coordinate pretrial proceedings in the cases transferred to the MDL. On April 24, 2006, a consolidated amended class action complaint was filed, which supersedes the class action complaints filed previously. One additional class action was filed after the date of the consolidated class complaint; it has been conditionally transferred to MDL 1720 but has not yet been made part of the consolidated class. Visa U.S.A. is a defendant in the consolidated class action complaint and nine additional complaints filed on behalf of individual plaintiffs. 

   The consolidated class action complaint alleges that the setting of interchange violates Section 1 of the Sherman Act; that Visa’s “no surcharge” rule and other alleged Visa rules violate Section 1 of the Sherman Act; and that the rules and interchange together constitute monopolization, violating Section 2 of the Sherman Act and California’s Cartwright Act. The consolidated class action complaint further asserts that Visa ties “Payment Guarantee Services” and “Network Processing Services” to “Payment Card System Services” and engages in exclusive dealing, both in violation of Section 1 of the Sherman Act and that offline debit interchange violates Section 1 of the Sherman Act and California’s Cartwright Act. The individual complaints include similar claims and also allege that Visa impermissibly ties services for “Premium Credit Cards” to services for other Visa-branded payment cards.  On June 9, 2006, Visa answered the consolidated class action complaint and moved to dismiss in part, or strike, claims for pre- January 1, 2004 damages. On July 10, 2007, pursuant to a joint request by the parties, the court entered an amended scheduling order extending the deadline for fact discovery to June 30, 2008, expert discovery to February 20, 2009 and the deadline for completion of all summary judgment and other pretrial motions to March 27, 2009. No trial date has been set. On September 7, 2007, the Magistrate Judge in MDL 1720 issued a Report and Recommendation to the District Court recommending that the District Court grant the defendants’ motion to dismiss the putative class plaintiffs’ claims for damages incurred prior to January 1, 2004. On October 12, 2007, the Magistrate Judge granted putative class plaintiffs’ request to brief the issue of whether the Report and Recommendation would affect the claims of non-party members of the putative class who opted out of the In re Visa Check/ MasterMoney Antitrust Litigation class action. Following the submissions, the Magistrate Judge declined plaintiffs’ request to advise on that issue. Putative class plaintiffs filed objections to the Report and Recommendation on November 14, 2007, and defendants filed their responses to those objections on December 13, 2007.”

9. “Interchange fees and related practices also have been or are being reviewed by regulatory authorities and/or central banks in a number of other jurisdictions, including the European Union, Australia, Brazil, Colombia, Germany, Honduras, Hungary, Mexico, New Zealand, Norway, Poland, Portugal, Romania, Singapore, South Africa, Spain, Sweden, Switzerland and the United Kingdom. For example:

    

   •

   The Reserve Bank of Australia has made regulations under legislation enacted to give it powers over payments systems. A regulation controls the costs that can be considered in setting interchange fees for Visa credit and debit cards, but does not regulate the merchant discount charged by any payment system, including competing closed-loop payments systems.

    

   •

   New Zealand’s competition regulator, the Commerce Commission, filed a civil claim alleging that, among other things, the fixing of default interchange rates by Cards NZ Limited, Visa International, MasterCard and certain Visa International member financial institutions contravenes the New Zealand Commerce Act. A group of New Zealand retailers filed a nearly identical claim against the same parties before the same tribunal. Both the Commerce Commission and the retailers seek declaratory, injunctive and monetary relief.

    

   •

   In March 2006, Banco de México, the central bank of Mexico, reached an agreement with the Mexican Banks Association to implement a new, value-based interchange methodology. As part of Banco de México’s transparency policies, details of the new interchange rates have been publicly disclosed and are available on Banco de México’s web site.

    

   •

   In December 2007, the European Commission adopted a decision that MasterCard’s multilateral interchange fees for cross-border payment transactions within the European Economic Area violated European Community Treaty rules on restrictive business practices and must be withdrawn within six months.”

[Source: Visa, Inc. 10-K SEC Filing]

UPDATE: An Extraodinarily Fictional Read, MasterCard® Explains the Value of Interchange Fees

According to a posting on the MasterCard® Newsroom pages, the second largest credit card association writes (what we assert is) extraordinary fiction.

Click here to read it in their own words.

This is MasterCard’s attempt to justify the annual $40 billion fee that merchants and consumers are forced to pay; many are unaware of this hidden tax.

While MasterCard explains that “a number of merchants and merchant trade groups have filed several lawsuits alleging that the U.S. interchange fees that MasterCard establishes violate antitrust laws, and that the cost of interchange is too high,” the litigation is a class-action which represents all merchants – not just a few.

The litigation was brought on behalf of us (30 Minute Photos Etc.), as lead plaintiff, and other businesses and trade associations across the country, not by lawyers. Rather than address the damages, the card association’s published points accuses lawyers for seeking these cases to enrich themselves, rather than discussing the billions-of-dollars that benefit the member banks.

In the case of ScanMyPhotos.com (a division of 30 Minute Photos Etc.) we agree with MasterCard that “every business establishes a price for the goods and services it provides.” in our case, we commercialized an entirely new business model around digitally preserving generations of analog pictures; we designed a technology and operation that also provides ultra low fees. We are not a cartel that artificially fixes prices, in fact, we regularly share our story with the entire photo imaging industry and regularly speak at trade shows like the Photo Marketing Association and even at last January’s (CES) Consumer Electronics Show convention – our rates and how it case about are a secret to nobody.  We will again address CES in January 2008.

In our opinion, the biggest misuse of words is MasterCard’s explanation that the interchange fee benefits to merchants is that it is a “small fee.” Forty-billion dollars each year is anything but a small fee. MasterCard does not fully address the history of these fees and fails to explain that it was created to be cost-based – to cover the manual credit card imprint costs and weighty processing charges incurred when merchants had to mail the paper receipts to have it processed. Today, it is mostly electronic, lightening-fast; and even faster than our super-speedy photo scanning business.

They even use the word “incredible” [”Accepting payment cards provides merchants with an incredible value at a fair price.]” They are right, it is incredible, as in so implausible as to elicit disbelief.

The reality is that with a nearly 80% market dominance, MasterCard and Visa® (which until recently were both owned and controlled [Visa is preparing to launch an IPO] by its member banks) are a monopoly. They control the market. Merchants, like us, are unable to choose not to accept their debit and credit cards – we would be out of business – especially companies like us with a dominant ecommerce revenue stream.

As for interchange fees, it certainly does “help foster… security” but not so much for consumers, as explained by MasterCard, but for the member banks, which look forward to this extraordinarily large cash-cow and unbridled revenue stream; it’s a tax few know about, but generates non-stop riches for MasterCard, Visa and its member banks. If they were so concerned about fraud costs, they would cease the issuance of billions of direct mail solicitations and providing credit cards to risky consumers. Today’s technology is also helping to lower other types of fraud costs, yet interchange fee adjustments do not reflect the cost savings either.

The fees do encourage “banks to innovate and develop new payment options,” but in some cases, to the detriment of cardholders and merchants. Look at the one-hundred plus separate merchant interchange fees which create new revenue streams every time a new innovative scheme is hatched to plunder more money from retailers and cardholders.

When reading the MasterCard explanations, they even discuss how the payment industry is “competitive.” As we see it, the only contest they host is one-way, and the competition is to seek out new ways to increase interchange fees. With an 80% market share, competition is a fleeting dream. Why are rates about 1.7% for an average transaction in the U.S., but only .7% in the U.K, .55% in Australia, and 0.0% for PIN-based cards in Canada?

And, according to MasterCard, they do “recognize that merchants do want lower costs for all aspects of their business.” It is encouraging that they recognize this fact, but if they strive to help lower interchange costs, why then are fees regularly rising?

Words and actions are very different when it comes to interchange issues and our WayTooHigh.com Credit Card Interchange Reportboasts 875 postings since February, 2005. WayTooHigh.com provides our prospective as a long-time retail and ecommerce business.

[commentary: WayTooHigh.com, originally posted Aug 23, 2007]

U.S. Chamber of Commerce Silent on Interchange Fees. Why?

As a longtime member of our local [Irvine] Chamber of Commerce [since 1990] we are wondering why the U.S. Chamber has not played a more active role in our battle against Visa, MasterCard and its thousands of member banks?  Could it be that the member banks are more active and well-funded members than 30 Minute Photos Etc. and ScanMyPhotos.com?

The closest to informational activism we came across was from a search of the word “interchange” which linked to this advisory written by one of the nation’s card processor’s, so really not much meat there. 

From the US Chamber website:

 Representing your ideas—and interests—in Washington for nearly a century.

The U.S. Chamber of Commerce is the world’s largest business federation representing more than 3 million businesses of all sizes, sectors, and regions. It includes hundreds of associations, thousands of local chambers, and more than 100 American Chambers of Commerce in 91 countries.

Whether you own a business, represent one, lead a corporate office, or manage an association, the Chamber of Commerce of the United States of America^®  provides you with a voice of experience and influence in Washington, D.C., and around the globe. Our core mission is to fight for business and free enterprise before Congress, the White House, regulatory agencies, the courts, the court of public opinion, and governments around the world.

From its headquarters near the White House, the Chamber maintains a professional staff of more than 300 of the nation’s top policy experts, lobbyists, lawyers, and communicators. The Washington staff is supported by eight regional offices around the country; offices in New York and Brussels; an on-the-ground presence in China; and a network of grassroots business activists.

Our members include businesses of all sizes and sectors—from large Fortune 500 companies to home-based, one-person operations. In fact, 96% of our membership encompasses businesses with fewer than 100 employees.

Mission Statement:

“To advance human progress through an economic, political and social system based on individual freedom, incentive, initiative, opportunity, and responsibility.”

Programs and Affiliates

• The National Chamber Litigation Center—our law firm that defends business interests and sues government agencies.
• The Institute for Legal Reform—the Chamber affiliate that challenges lawsuit abuse on many fronts, fights for legal reform legislation, and educates voters in state judicial and attorney general races.
• The National Chamber Foundation—our public policy think tank that drives the debate, develops the data and arguments, and influences policy options on the most critical business issues.
• The Political Program—the Chamber’s aggressive political action component that endorses, supports, raises money, and turns out the vote for pro-business congressional candidates from both parties who are engaged in key races.  
• Business Civic Leadership Center—an organization devoted to facilitating corporate civic and humanitarian initiatives.

Will Visa USA’s “Consumer Education” Tool be Silenced During Their IPO?

Americans for Consumer Education and Competition, Visa USA’s PR and advocacy machine, which “has the financial support of Visa USA” has been quiet of late. 

Normally that are countering our comments and issuing press releasesthat taunt millions of merchants which accept Visa’s network of electronic payment cards.  They explain how helpful debit cards are and how it helps train teens about conserving money.  However, we wonder whether Visa’s Washington D.C.-based tool will pull up tent and move on, as their source of funding is required to lay low during their planned IPO period?   When industry experts begin to question why any investor would want to purchase equity in a company that faces possible insolvency due to their pending litigation, the company can be voiceless.  One of their most comical press releases appeared right after our first class-action complaint in 2005.  This one was adorable: they suggested that our litigation would force consumers to pay more. Instead, over the years, the member banks have vastly raised their rates and today we are paying $40 billion in hidden interchange fees each year.  They failed to mention that while their release provoked the courage to demand that consumers need efficiency and choice, Visa is the giant monster which, along with MasterCard control, 80% of the total electronic payment network and the only thing that is efficient is how easily they can fix prices and practice anti-competitive illegal maneuvering to enrich their pockets.

Also notice how convenient it is for the giant card association to be wedged in the midst of a “quiet period” imposed by the Securities and Exchange Commission.  Visa will be unable to comment when the EU Fair Trade ruling is announced within the next few weeks.  They will also have to be silent as more and more merchants question the foundation of the interchange fees.  They will have to be silent as motorists ask why Visa is reaping windfall profits for its member banks during our economic energy crisis.

[Background: When The Bill Comes Due,” Businessweek]

[commentary: WayTooHigh.com]

“Long-Awaited Visa Offering Tests The Power Of Plastic” (via IBD)

Excerpts from Investor’s Business Daily [click here to read Nov. 20th IBD article]

• …”IPO Desktop’s Francis Gaskins warns not to expect MasterCard redux. Visa must go public by contract to its shareholders, partly to pay for litigation it’s involved in. That means that the yet-to-be-named price may reflect more desire for quick cash than for a good aftermarket.”
• “Like the rest of the credit-card industry, Visa has been in the middle of a legal controversy over interchange fees. Several countries are taking regulatory action, and some 50 class-action lawsuits are in the works over the issue. The battle is leeching money from Visa, and could result in damages.”
• “Only four banks account for 23% of Visa’s revenue, with JPMorgan providing 10% by itself. A disruption in any of these relationships would hurt the company.”
• “It will reserve an unspecified amount of this for litigation, some for redeeming preferred stock and the rest for general corporate purposes.”

[Source, via Investor’s Business Daily]