Visa is a world leader in the credit card industry – and they are looking to get even bigger. The company announced on April 21 that it will pay $2 billion cash, or $26 a share, for Cybersource, which will become a wholly-owned subsidiary. Continue reading "Visa Acquires Cybersource for Global Ecommerce Expansion"
In January, MasterCard made an effort to enforce new regulations and best practice guidelines pertaining to online direct marketing – specifically “negative option” marketing, which they consider to be a “brand damaging” practice. The FTC Negative Option staff report, featuring five key marketing principles, triggered both Visa and MasterCard to make changes to their operating guidelines. Continue reading "Card Association Response to Updated FTC Regulations"
As a merchant, you accept Visa, MasterCard, American Express and Discover. You have learned that each card brand has its own set of data security guidelines. So, which one do you follow? Good news! The card industry has made that decision for you.
A Little History
The PCI Security Standards Council (PCI SSC) was formed in December, 2004 by the major card brands (Visa, MasterCard, American Express, Discover and JCB) to educate and enhance the security standards in the credit card industry. Prior to 2004, each card company had developed their own set of data security standards programs:
Continue reading "CISP, SDP, DISC…What Security Standard Do You Follow?"
It seems as though anytime a company gets large enough, there will always be people who feel it is unfair and begin to wage war on what they don’t know. I have talked about Visa and MasterCard having to pay large settlements to Discover after a long anti-trust battle. Although Visa lost that battle, the war on card associations is still ongoing.
Overseas, many organizations have formed campaigns against Visa and MasterCard. In Canada, ad campaigns are being run by The Retail Council of Canada telling Visa and MasterCard to “stop sticking it to retailers.” The Retail Council of Canada is a non-profit association that represents more than 40,000 stores of all retail formats.
Continue reading "Card Association Battles Around the Globe"
Most people don’t distinguish a difference between Visa and MasterCard – both are champions going head to head in a fight to see which plastic is going to be in your wallet. As far as the average person is concerned, the two cards are identical. In most other industries when you have two similar companies, they typically have some different products. Let’s sound the bell and let the battle begin.
Both companies have a lot going for them. They are (even in today’s economy) considered to be excellent stocks with prospects of a bright future. They have an excellent product in a world moving to cashless options. Visa has gotten a great deal of attention because of its IPO earlier this year. It is my opinion that both companies have exploded from their respective IPOs, but MasterCard still remains the more stable bet.
Here are some things to consider:
We have seen the contactless functionality pop up in many stores over the last few years. You have probably seen the popular commercial where people are walking in an efficient circle, taping their card onto a contactless device, until one guy pulls out cash and the whole line comes to a screeching halt. Contactless payment systems are credit cards that have a device using a Radio Frequency Identifier (RFID) to make a secure payment. The consumer is able to wave their card over a reader at the consumer location to make their purchase. There is typically no signature required for purchases under $25.00.
Although many large retail chains such as Regal Cinemas and McDonalds have the technology available, the process has been put under a great deal of scrutiny because it is said to be more susceptible to identity theft and other types of fraudulent activity. The devices are easily hacked using a wireless frequency. Regardless of the security risks, all the major credit card companies were ready to get their piece of the action. In July of 2005, AMEX launched ExpressPay, which was quickly ditched because of a lack of response by consumers. The Discover Network released its Zip technology, Visa Inc released payWave, and MasterCard has PayPass.
Visa has always been on the cusp of technology and is always looking for new and innovative ways to expand their sphere of influence. Visa is launching four new programs that allow payments and services via mobile devices. Two such programs are being launched in Brazil and Korea, and the other two will be in the United States.
Previously, I have talked about Google’s Android platform working with Visa on a service that sends you an alert if any payments have been made on your Visa card. This is great in helping to protect against fraud, and will also help in locating ATMs, but I don’t consider this to be a new technology.
In 2007, Visa partnered with Qualcomm, a wireless chip developer, to create technologies that allow consumers to make credit card transactions with a cell phone and a reading device. This would add another way for wireless carriers to make additional revenue by being paid a percentage of the transaction.
In recent news, Discover Financial Services has been going round and round in a lawsuit with Visa Inc. and MasterCard Inc. Discover claims restrictions were placed by Visa and MasterCard – the world’s two largest card companies – on banks to stifle competition and violate antitrust laws. Visa and MasterCard argue that Discover simply has not been able to close partnerships with banks because of the smaller fees that are made on their cards. But this is just one of many recent complaints about Visa’s and MasterCard’s practices.
Visa and MasterCard are under the gun in Congress as well, for price-fixing and price gauging practices. The Credit Card Fair Fee Act (HR 5546/S 3086) stops the price fixing by Visa and MasterCard by insisting upon the use of a transparent market-based process. Some may say these are anti competitive practices, while others speculate that regulation is necessary.
Most merchants have likely seen a disclaimer on their monthly credit card processing statements about an upcoming increase in Interchange rates. The card associations (Visa and MasterCard) have announced some significant changes. As you are probably aware there are hundreds of different Interchange categories. During April and October, rates in some categories are increased or decreased, and new categories are created. These Interchange rates are not to be confused with reimbursement fees. I mention this because there are two different rate charts. Reimbursement fees are charged to financial institutions to transfer funds between issuing banks. Yes, the banks pay percentages as well.
Several new categories will take effect October 3rd, 2008. Debt Repayment, Government to Government, and Tax Payment are some of Visa’s new categories.
Continue reading "Will New Interchange Rates Affect Your Business?"
Many merchants violate the credit card companies’ rules and don’t even know it. Most stores don’t have any procedural information about how to process a credit card sale as part of their employee training other than hitting the “sale” button, and why should they? Are there any consequences?
I am continually shocked by the number of Visa and MasterCard violations made by merchants I shop with a daily basis.
Here are a few mistakes I’ve personally witnessed merchants make:
Continue reading "How Do Merchants Violate Visa and MasterCard Rules?"
May 20, 2010 
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