Credit Card News
Advertising Disclosure
Credit-Land.com is an independent, advertising-supported web site. Credit-Land.com receives compensation from many credit card issuers whose offers appear on our site. Compensation from our advertising partners impacts how and where their products appear on our site, including, for example, the order in which they may appear within review lists. Credit-Land.com has not reviewed all available credit card offers in the marketplace.
Credit Card Applications » News » Other » Fed crushes visa’s share value

Fed crushes visa’s share value

By
Add to Favorites:
Fed crushes visa’s share value

Shares of Visa dropped all of a sudden last Thursday. There was a drop by 12.7% (regular trading) and it was a similar scenario for its rival competitor MasterCard (Federal regulation of interchange fees charged on debit cards). The primary source of income for all card companies is the swipe or the interchange fees. Most of the small businesses have in the past complained about the dominance of these two card issuers. Due to the presence of these two card companies in the transaction industry and their monopoly, there is very little room for any other competitor in order to reduce costs.


The interchange fee is around 44 cents per transaction on the debit card, as per the claims made by the Fed. There is speculation that this fee might be reduced to 7 or 12 cents by the Fed. Since these are scary figures, it is no wonder that the investors have decided to dump these stocks, which were once the hottest IPO in 2008.


But is the government justified in making this sacrifice when it is a well known fact that it was Visa and its IPO which was one of the chief reasons for financial institutions to survive the financial debacle during the recession.


This has been a controversial piece of bad news in recent times and all credit card companies are hit by this. American Express has made it amply clear that it will not bow down to the demands made by the Fed. Due to this their stocks crashed from the $43 range to about $38 in the first week of October. However, Visa as well as MasterCard took no such stand and are hence expected to take the direct hit due to all these legislative changes. American Express is very different in many ways as its financial arm remains widely exposed to all the fluctuations in the market. Whereas it is not so with Visa and MasterCard as they license their brands to the banks which take full responsibility on all defaulted payments while these two cards remain mere payment processors. These three are however the main market shareholders in the credit card business.


The Fed`s move to cut the transaction fee by up to 90% will be a big blow to Visa and this in turn will have a ripple effect on the banks that use Visa cards as they would also end up losing on their fees as they get a percentage out of the interchange fee.

Add to Favorites:

Related News:

Citi Card Tracker Unveiled

By Dar Dowling, Posted: December 8, 2016

There is a new feature in town now that Citi credit cardholders in the U.S. can track where their replacement card is every step of the way as it travels to their mailbox. This new feature is available in the Citi Mobile App, whether the ... Continue reading
New Digital Wallet From SDCCU

By Dar Dowling, Posted: December 7, 2016

The San Diego County Credit Union (SDCCU) is rolling out their brand new digital wallet app for iPhone users. With the app people can use their phone to safely do their banking, whether that means using their phones to expedite cash ... Continue reading
Free Pizza on Papa John’s & VISA

By Dar Dowling, Posted: December 6, 2016

Eating pizza while watching a football game is a time-honored American tradition, so it’s not surprising that VISA, has teamed up with Papa John’s to give fans a little more this season. If fans use Visa Checkout they can take advantage of ... Continue reading
Get the latest news, articles and expert advice delivered to your inbox. It's FREE.
Get 0% Intro APR on Balance Transfers and Purchases for 21 months. After that, the APR will be 12.24%-22.24% based upon your creditworthiness.
For Excellent/Good Credit
Earn 1% cash back on gas and grocery purchases. Terms apply.
For Fair Credit
Guaranteed $500 Unsecured Credit Limit
For Bad Credit