Visa Inc (V)

Hi,

Not a UK company, but the VISA fee dispute with Amazon may affect UK companies in some form.

There seems to be a huge misconception:

The ‘interchange fee’, the increase of which has caused the dispute, is payable to the card issuing bank and not to Visa Inc - I’ve read in a few places that Visa is being greedy, by increasing this to 1.5% in the UK (after leaving the EU with it’s ceiling of 0.3%) but in reality none of the interchange fee is paid to Visa Inc. It’s paid to the Visa card issuing bank, who in turn do pay a smaller fee to Visa for accessing Visa’s payment network.

Maybe the interchange fee is therefore an instrument to promote growth for Visa/Mastercard, rather than something which fills the coffers directly? i.e. it would persuade a bank to issue Visa cards rather than Mastercard, because the bank makes the most money from the credit card company with the highest interchange fee?

Sometimes this doesn’t work - for example Amex charges 2.9% to 3.5% and a lot of retailers won’t use their network. Despite this, AXP seems to be doing well on the NYSE.

Also, I’ve heard that the banks are trying to cut out Visa. This is another comment I don’t understand, because the banks earn huge fees through this interchange fee. Why would they cut credit cards out completely by going direct to the purchaser? The end result would be the purchaser pays less and the banks get smaller fees - I don’t really think banks are interested in that? :grinning:

Finally I don’t really understand how individual banks and sellers could cut out Visa when a money transmission company/system needs an overview of the whole banking system to enable it to work?

Does anyone know any more about this rather confusing ‘end of the credit card’ story? I’m not so sure this is the end of Visa, just Amazon being Amazon? (I hold).

Regards,

Ben

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