Don't Be Surprised With Drops In Price Of Visa And MasterCard Stocks

A trade group representing operators of ATMs has filed a lawsuit against Visa and MasterCard, accusing them of fixing prices and suppressing competition among ATM networks. ^[1]
The lawsuit was filed in federal court in Washington and alleges that Visa and MasterCard violate antitrust laws by placing restrictions on the prices these independent ATM operators can charge customers using other networks such as STAR or TransFund.

Lawsuit Targets Fee Agreements

Under the network rules of Visa and MasterCard, the service fee for any transaction at an ATM should not be less than the amount charged at that ATM for a Visa or MasterCard transaction. This effectively means that an ATM operator cannot offer customers a discount or benefit for completing a transaction over a network that is less costly to the operator. More competitive pricing might allow these smaller networks to gain market share and more business.

The lawsuit claims that this artificially raises the price consumers pay for ATM service, limits operators’ revenue, and violates antitrust laws. The lawsuit seeks national class action status and would be comprised of independent operators of some 200,000 ATMs in the United States.

Potential Impact on Visa, MasterCard

The lawsuit alleges some serious charges against Visa and MasterCard and the way these companies keep competition at bay. As a result of this lawsuit, the companies’ litigation and settlement expenses will likely rise, taking a toll on the profits that are already under pressure after the Fed put a cap on the fees on debit card transactions.

In the long run, if the courts find Visa and MasterCard to be in violation of antitrust rules, we may see a sharp increase in alternate low cost networks which would bring down transaction charges at ATMs. However there wouldn’t be a significant threat to Visa and MasterCard’s businesses, because their widespread networks across the world would take a new entrant at least a decade to establish.

URL: http://www.forbes.com/sites/greatspeculations/2011/10/18/dont-be-surprised-with-drops-in-price-of-visa-and-mastercard-stocks/

Visa, MasterCard to use buying history for ad targeting?

All the purchases you make with your MasterCard or Visa could be used to provide you with more-targeted ads as you surf the Web, a new report claims.
According to today's Wall Street Journal, the credit card companies are currently trying to work out a system whereby purchases consumers make in a brick-and-mortar store can be used to deliver more effective ads online.
A MasterCard document obtained by the Journal outlines some of the company's plans, which included linking Web users with purchases. According to document, the credit card provider said it believes "you are what you buy."
However, MasterCard told the Journal that the plans included in that document have been shelved because it would have revealed too much information about individual buyers. Instead, the company told the Journal, it is exploring ways to anonymously group a person's purchase history with others to create marketing "segments." That data would then be sold to marketing firms.
Citing a source, the Journal said that Visa is planning a similar service, which would aggregate its customers' purchase history into segments, including location, to make ads more effective at appealing to people in a respective area.
Although those plans might have a profoundly positive impact on the advertising industry, it does raise several privacy concerns. Although companies have long shared customer data with marketing agencies, individual consumers have always been wary of companies peering into where they are, what they're buying, and how much they're spending.
For its part, MasterCard told the Journal that customers have nothing to worry about. For one, the company says, it collects data, such as when a purchase was made and where, on 23 billion transactions, but it never includes who actually makes the purchase. Plus, both MasterCard and Visa, which also collects that information, allow users to opt out of the data collection, if they so choose.
Looking ahead, there's no telling what MasterCard and Visa will do, since, as the companies pointed out to the Journal, their plans are still "preliminary."
However, as the Journal's sources in the advertising industry said, buying history is a potential treasure trove for marketers. And MasterCard and Visa, along with other credit card companies, realize that. What's more, the Journal says, MasterCard could be getting close to selling purchase data through online data auction services, BlueKai and Exelate, though those firms have yet to sign an agreement.
Neither Visa nor MasterCard immediately responded to CNET's request for comment.

URL: http://news.cnet.com/8301-13506_3-20125179-17/visa-mastercard-to-use-buying-history-for-ad-targeting/

More Lawsuits Take Aim At Visa And MasterCard ATM Policies

NEW YORK (Dow Jones)--Visa Inc. (V) and MasterCard Inc. (MA) face new lawsuits claiming their fee policies for ATM transactions are anti-competitive.
One suit, filed Monday in U.S. District Court in Washington, D.C., argues the companies, which process credit- and debit-card transactions, prohibit operators of automated teller machines from charging consumers different levels of fees depending on which card network processes their transactions.
"The ATM restraints prevent ATM operators from offering their customers a discount or benefit for completing a transaction over a network that is less costly to the ATM operator, so consumers cannot be rewarded for using a lower cost and more efficient network," the suit said.
In addition to Visa and MasterCard, several smaller debit-card networks offer consumers ATM access, including First Data Corp.'s Star network and Discover Financial Services' (DFS) Pulse network.
A separate lawsuit filed in U.S. District Court in Washington, also naming Bank of America Corp. (BAC), J.P. Morgan Chase & Co. (JPM) and Wells Fargo & Co. (WFC) as defendants, makes similar allegations, Bloomberg News reported Wednesday. The suit claims the banks conspired to fix ATM fees.
Last week a trade group called the National ATM Council Inc. filed a suit against Visa and MasterCard arguing the companies' rules amount to price-fixing. The group, which represents independent ATM operators, says the operators have suffered losses in the "tens of millions of dollars" because of the companies' rules.
A MasterCard spokesman wrote in an email Wednesday that the ATM operators' claims lack merit.
"These rules were put in place to protect consumers from ATM operators seeking to impose discriminatory surcharges on our cardholders," the spokesman wrote. "We believe these important consumer protections must be preserved and we will vigorously defend against the claims brought against us."
A Visa spokesman did not immediately respond to a request for comment.

URL: http://online.wsj.com/article/BT-CO-20111019-712283.html

WikiLeaks says "blockade" threatens its existence

After releasing tens of thousands of confidential U.S. government cables, WikiLeaks needs $3.5 million over the next year to continue operating, Assange said.
Visa and MasterCard stopped processing donations for WikiLeaks in December 2010 after the United States criticized the organization's release of thousands of sensitive U.S. diplomatic cables from its embassies all over the world.
In the 24 hours before credit card donations were blocked, the organization said it had received $135,000. Now, it is receiving on average about 7,000 euros ($9,700)a month.
Assange said there were no lawful grounds for the blockade by Bank of America Corp, Visa Inc, MasterCard Inc, eBay Inc unit PayPal and Western Union Co, which he said had cost Wikileaks 95 percent of its revenue.
"If WikiLeaks does not find a way to remove this blockade, given our current levels of expenditure, we will simply not be able to continue by the turn of the year," Assange told a news conference.
In July, WikiLeaks filed a complaint to the Directorate-General for Competition of the European Commission, saying Visa and MasterCard had breached antitrust provisions set out by the EU Treaty.
Assange, who is fighting extradition from Britain to Sweden, where he faces allegations of sexual misconduct, said he hoped the European Commission would make a decision to hold a full investigation by mid-November.
In interviews last year, Assange said WikiLeaks had extensive internal documents from a bank, believed to be Bank of America, an announcement that knocked 3 percent off the value of the bank's shares.
However, on Monday he said this data was now out of WikiLeaks' hands and in the possession of an unnamed suspended WikiLeaks employee.
"At this stage, we do not believe, unfortunately, that we will regain that material, which is a great loss," he said.
Daniel Domscheit-Berg, who last year was fired by Assange as WikiLeaks' co-spokesman, told Reuters in August that he had destroyed about 3,000 submissions that WikiLeaks had received relating to Bank of America.


URL: http://www.reuters.com/article/2011/10/24/us-britain-wikileaks-idUSTRE79N46K20111024?feedType=RSS&feedName=topNews