Posts filed under 'News'
Visa has an upcoming IPO planned for this year. They still haven’t released a formal date but it looks like it is going to be mid to late march as predicted.
This IPO may have a far greater affect on the US economy than anyone originally imagined. Because of the current credit and mortgage crisis, banks don’t have a good financial outlook for the coming year, or any year in the near future. Fraudulent mortgages and foreclosures are going to continue taking their toll on the banking systems, and the huge rate of inflation isn’t going to help any. Visa’s IPO could really change all of this.
Visa is composed and run by member banks with a board of directors consisting of members from JP Morgan Chase, BOFA, Wachovia, US Bancorp, Wells Fargo, Providian, First National of Nebraska, Texas First Bank, NationalCity, and SunTrust. While Visa itself remains non-profit, the banks that issue Visa cards and run Visa are certainly for-profit companies. When Visa goes public, the member banks are going to get a lot of pre-IPO stock. If we base Visa’s potential success from MasterCard’s IPO last year, Visa’s stock value could go up by four times, soon after their initial offering. Even though the economy isn’t in the same shape as it was last year, Visa is a far stronger company than MasterCard was, and there is little doubt to Visa’s strength even in a poor market. Visa is more than double the size of MasterCard by transaction volume, and this IPO should prove to be the second largest in world history, largest in US history.
If Visa’s stock sells for the median predicted price of about $40 per share, the primary member banks are going to get some major relief. The pre-IPO value that member banks are expected to receive is: JPMorgan Chase about $1.1B, BOFA $545M, National City $380M, Citigroup US Bancorp and Wells Fargo about $240M each. This should immediately go up after the IPO, and like MasterCard could be four times higher in a few months.
This huge increase in capital for these banks will have a cascading effect on their own stock, which should dramatically increase. Banks are having a hard time maintaining their current value and Visa could create a surge of investment that could turn things around. There’s probably not anything that’s going to turn around the mortgage and credit crunch, but a $17 - $50 billion bump in bank stock should really help investors regain some trust.
Related Posts:
Where Visa is headed…
Visa is going public
February 27th, 2008
Ingenico made an offer to purchase Hypercom corporation.
Ingenico and Hypercom are two of the largest credit card terminal manufacturers after Verifone. Verifone made a purchase of the Lipman corporation about a year and a half ago, which set their market share far ahead of any competitor.
The combination of Ingenico and Hypercom would create a company with an annual revenue of around 800M. Verifone is currently at about 2B so there is still a sizable gap, but this could create some real competition for Verifone.
Ingenico is less popular in the US than in other countries, but they make some very interesting products, and was one of the first to offer a reliable pay at the table solution. Hypercom is the number two terminal manufacturer in the US. Hypercom would be an excellent medium for Ingenico to grow their US presence.
I think that this would be a very smart acquisition for both Hypecom and Ingenico.
February 11th, 2008
About a week ago Verifone stock took a huge dive due to a overestimate of profit margins. Verifone stock fell 45% in a single day when they announced that profit had been overstated by 80% for 2007.
Companies do make mistakes, and occasionally large ones like this. However, in this particular case the CEO sold his own Verifone stock the day before the crash making millions while every other shareholder lost half their Verifone stock.
There is now a class action lawsuit against Verifone for violating the Securities Exchange Act of 1934.
December 18th, 2007
For the first time in history, debit card usage has passed credit card usage. A study by the Federal Reserve, shows that debit card usage is now 27% of non-cash transactions while credit is now 23%. There was no change in credit card usage from 2003 - 2006 while debit card usage went up 70% (from 19% to 27%) over the course of three years. At the same time the use of paper checks went down 72% and ACH bank drafting went up by 69%.
Nothing surprising but paper checks are definitely on their way out and are being replaced by electronic drafting and debit cards. It’s about time!
For more Federal Reserve Reports:
http://www.federalreserve.gov/paymentsystems/paymentsresearch.htm
December 13th, 2007
Bank of America is going to again issue the BankAmericard.
Along with American express, the BankAmericard was one of the first bank issued credit cards, both originally issued in 1958. BankAmericard was later changed to Visa to differentiate Bank of America from the card.
Here’s a little more credit card history.
October 16th, 2007
Mastercard just released their own payment gateway.
This system appears to be a little different than the traditional (authoize.net / Verisign) payment gateway. It appears to be more like what we would consider a P2P money transfer medium, where buyers can pay businesses directly and businesses can invoice and collect payments from their customers. I guess you would call it a B2B money transfer system. There’s very little information about it currently, but I will be sure to post updates as they release more information about it. The website has some general information for buyers and for sellers.
October 4th, 2007
I’ve been working on a new project for some time now, and it is finally complete enough to make public (still has a long way to go though). I started making a payment provider directory a few months ago and after integrating various ideas into it, I think it is finally going to be something worth the effort. All of the other payment services directories (BOTW, DMOZ, Business.com) are terrible, and I hope to make this an authoritative, unbiased directory for processing services.
Basically, this payment directory is designed to list only real, registered payments related service providers. There is no bias to any company. This should help business owners that are trying to verify the validity of a company that they are looking at. It also has a visual feature on the front page that organizes different service providers in a hierarchical model. It’s the only visual model of processor relationships that I have ever seen, and it makes a lot of sense to me especially after seeing it come together. I don’t plan to have user reviews of any companies at this time, mainly to avoid the “this company sucks” reviews, which don’t provide a lot of value to most individuals.
Current Categories:
Registered ISO’s / MSP’s / Banks (Must be registered with Visa, Mastercard and a sponsor bank. Sales agents don’t count.)
1st Tier Payment Gateways (Co-branded payment gateways don’t count.)
Processing Equipment Manufacturers
Bankcard Attorneys (Must be an active member of a state Bar, and have experience in bankcard law)
PCI / SDP / CISP Security Services
Future Categories: (the spam potential is huge for these so I’m hesitant to add them)
Outside Sales Agents
Shopping Carts
There’s definitely some inaccuracies in relationships at this time, but I expect to work these out in the next few months. As more companies are added to the directory the visual model will become increasingly accurate. I have to give credit to smashing magazine, as their recent post on data visualization inspired me to apply it to the directory. Also, the data visualization code JsViz was used for the homepage which is pulled dynamically from the directory database.
I will admit upfront that the visual model is innaccurate in the sense that many ISO’s are registered with more than one processor. As a result, an actual visual model would look like a spiderweb rather than a snowflake.
So, if you get a chance, check out the payment directory. Contributions will be very appreciated, and please let me know if you find any incorrect information, or suggestions.
August 15th, 2007
Amazon is planning on extending their payment service to non-amazon payments in a system designed to compete with Google checkout and Paypal. Instead of adopting the features of just Google Checkout or Paypal, Amazon will use some of the features from both services.
This service is supposed to offer a simple integration method similar to Google checkout where visitors will be redirected to amazon.com to finalize their purchases. Additionally, this service will act as a P2P transfer system between amazon.com members.
Since amazon.com has a huge base of businesses that sell on the amazon.com website, this new payment service could become a major competitor for both Paypal and Google. Unlike Google, who has had difficulties in getting widespread adoption of the Google checkout system, Amazon already has the businesses to support a new system, and for many this new payment system would be quickly adopted. Ebay was the driving force behind paypal, and Amazon.com is definitely large enough to be a driving force behind their own payment system.
Originally reported on TechCrunch »
August 1st, 2007
It’s been two years since I started writing this blog. It went through some very weak periods, especially in the beginning, but I’m happy to see it has come this far. I would like to thank all of the subscribers to this blog, and anyone else who occasionally stops by. I have received more than one email of praise and I’m glad that the information that I provide has been useful for a few people out there.
I will have to admit that the hardest part of blogging is maintaining any form of consistency which is blatantly obvious if you look at my topics or post dates.
If you have any suggestions for the future, or if there is any topic that you think should be addressed more / better please let me know. I have a few major ideas planned for the near future, but I’m always open to suggestions, and criticism.
Once again, thank you all for reading.
July 26th, 2007
Visa announced some months plans to take their company public in late 2007 or early 2008. I get about four questions a day asking if I know when Visa is going to go public. Here is my update on Visa.
Although Visa has still not named a date for their IPO, they have formally started the IPO process.
On June 22, Visa’s CEO John Coghlan resigned, as Visa hired Hans Morris from Citigroup to be the president of Visa through the IPO. The restructuring of Visa will include combining of Visa USA, Visa Canada, and Visa International, while Visa Europe will remain an independent organization.
My thoughts on the IPO:
I can’t see there being any chance of Visa’s IPO happening in 2007, so I would put it a few months into 2008 (Feb - Apr). Unfortunately, I think that Visa shares are going to be impossible extremely difficult to obtain pre-IPO. Looking at the success of Mastercard’s IPO, the fact that MasterCard shares have quadrupled in the past year or so, and that Visa has a much stronger pre-IPO brand than MasterCard, getting shares is going to be hard. Your best bet, unless you have million to invest, is to get into an investment group that is planning on bidding on a big chunk of Visa stock. Hopefully you can secure a few shares for yourself before the price explodes a few hours after the IPO.
The IPO’s impact:
It’s still unclear exactly how Visa’s IPO is going to impact consumers or businesses. On one hand, Visa will be concerned about public appearance, but on the other they are going to become a profit hungry monster, with a hand already in everyone’s back pocket. The other certainty is that some major companies (Walmart possibly) are going to be purchasing Visa stake in bulk. This will not only be one of the largest IPO’s in history, but could be the widest impacting public offering ever.
If you want to know immediately when Visa announces their IPO date, sign-up for the Merchant Account Blog’s RSS Feed. I will be blogging about Visa’s IPO as soon as I get information on when it is going to happen, or other changes.
July 3rd, 2007
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