Posts filed under 'News'
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
A few weeks ago Arkansas passed a law that would cap merchant account termination fees to $50, or one month’s minimum charge.
Download Arkansas Act 911 .pdf
This law was passed un-democratically “quickly” as the Arkansas congress drafted, and passed it without any notice to media, processors, banks, citizens, or even merchants until the law was written.
As far as the law itself, it mainly requires processors to be transparent in the contract length, and any termination or other fees that would be incurred if a business closed their merchant account before the contract was ended. It ensures that merchants can read the contract because it goes as far as setting a minimum font size for the merchant application. The law does not provide any protection for businesses in leases, or other equipment related recurring fees or charges. It also only applies to businesses signing up after July 31, of this year.
Overall the fee transparency is something that a lot of ISO’s need to address better. Capping termination fees without any input from processors is completely unfair, even though termination fees are often excessive. The law is trying to help businesses from getting scammed but because of some poor editing, it isn’t going to do anything.
Here’s where they went and messed the whole thing up:
(d) The foregoing provisions of this chapter do not apply to:
(1) A state bank or a state savings association that offers a credit card processing service;
(2) A national bank or a national savings association as defined 31 in 12 U.S.C. 1813, as it existed on January 1, 2007, that offers a credit card processing service; or
(3) The parent, affiliate, or subsidiary of any bank or savings association that offers a credit card processing service.
Well, they effectively voided out this entire document with #3. Since every legal ISO is an affiliate of a bank, this law no longer applies to anyone, unless they are somehow providing services illegally, in which case they probably have other things to worry about. Someone obviously was mad, in a hurry, and forgot to do their research because it doesn’t take much see the conflict.
I guess that’s what happens when you pass a law without any public notice or input.
June 28th, 2007
I just got word that Verifone is making an industry wide increase on prices on many of the popular terminals that they offer.
My guess is that Verifone is tired of competing with themselves and is only making this increase because there is no competition that can stand up against them. Since Verifone owns Lipman as well, they have a complete dominance over the entire processing equipment market. Raising their price is a smart move for them because almost all equipment being used is theirs. It also sucks for business owners and equipment resellers as many terminals are going to nearly double in price.
Terminals that are going to go up in price in the next few months:
- Omni 3200SE
- Omni 3740 Dual Comm
- Omni 3750 Dual Comm
- Omni 3730/3730LE
- VX 570/VX 570LE
- VX 610
- Nurit 8320
- Nurit 292 Pinpad
- Verifone P250 Printer
- Verifone P900 Printer
There are also a few other increases on a few rarely used pinpads, and printers.
This definitely appears to be one of those situations, antitrust regulation were made to protect against. Unfortunately nobody paid any attention to an obvious monopoly in the making when Verifone purchased Lipman last year.
June 12th, 2007
I’m a few days behind on this one. I completely forgot to write about it last week, but the PCI and Data Security Compliance Blog reminded me when I saw it in my feed reader.
Last week, Texas legislation passed a bill that makes businesses liable for any monetary expenses resulting from data security breaches of their company. The data that is specifically covered under this is credit card or other magnetic or chip stored information, and personally sensitive information. The bill also states that businesses must safeguard sensitive information and that they must take action if a data security breach is discovered.
Businesses will be responsible for any costs that a financial institution incurs when they have to replace customer’s cards that may have been compromised as well as repay the financial institution’s legal fees. More importantly, the business is completely liable for any refunded transactions that the bank has to make to the customer (This is the first time that I have ever seen a bill, law, or regulation that takes chargeback liability from the business that actually accepted the card.) Also one of the only logical regulations I have seen regarding the payment processing industry.
The bill does not specify how the data must be stored, so any business that keeps copies of sensitive data, either in an electronic database, or on paper, is subject to this bill. Also, businesses that are PCI compliant are protected.
This is an extremely important bill and I imagine that many states are likely to follow suit. In my opinion the most significant part of this bill is placing liability on the business where the breach occurred. Realistically, this could be a very positive change for online businesses and others that are subject to stolen card fraud. I’m not sure if there is a measurable percentage of fraud that occurs from breaches, but if there is it could definitely help take the load off businesses being hit with this type of fraud.
Texas BILL HB03222E (text document)
Actual Texas BILL HB03222E
Other blogs about this law:
Texas first state to make PCI law - pcianswers.com
PCI Codified into Texas law (nearly) - pcidss.wordpress.com
The Law of PCI - blog.ncircle.com
PCI Takes A Twist - blog.loglogic.com
May 18th, 2007
The Green Sheet reported this morning that that Visa may be planning to list the ISO’s that are legally registered with them. They also may be starting to crack down on ISO’s that are not operating strictly according to Visa regulations.
I think that this could be a great step in cleaning out many of the bad areas of the processing industry. There are thousands of website selling merchant account services, and from my experience looking at them, I would venture to say that more than half are not complying to Visa’s ISO regulations.
This could also provide another good tool for businesses looking to accept credit cards, if it is made readily available to the public. A person could make sure the company they are planning on processing with is actually a legally registered with Visa. This wouldn’t provide any background to whether the company was providing a quality service, but it would eliminate any doubt as to their legal affiliation.
However, Visa publishing registered ISO’s could have a negative affect on independent sales agents, as many of these sites are not compliant with current regulations, but are barely non-compliant. One current regulation states that sales agents must use the exact name of the ISO that they provide services through as their own DBA. Most of these non-compliant sites could be easily fixed to properly comply to Visa regulations, but Visa is extremely picky when inspecting websites for compliance. Something that seems so simple is actually a very complicated, bureaucratic mess, when you get down to it.
The other thought that worries me is that the only affect this may bring about, is to tighten the regulations on ISO’s that are compliant while ignoring companies that aren’t registered. (Like an anti-gun control argument, “ban guns, and the criminals are the only ones left with them”.) Currently, if you are a registered ISO you are under the microscope at least once per year, but if you aren’t legally registered, Visa and MasterCard really don’t care. There’s just too many websites operating illegally for anyone in Visa to take interest. In fact, I’ve been told first hand that it’s not policy to police non-registered websites on the internet, but only the ones that are registered. They would have to drastically change this policy before anything productive ever came from listing registered ISOs.
In response to this, I created a website listing registered ISOs that I have been able to identify.
May 7th, 2007
An article on MSN: Democrat proposes lifting federal ban on Net gambling talks about how a Democratic politician has proposed to lift the ban on online gambling.
While I’m not a huge fan of online gambling, I do believe that it should be legal and that the government should never have stepped in, in the first place. It would be far more beneficial to the government to regulate or tax online gambling than to completely ban it. I have read several stories in the past few months of gambling operators being arrested and business being raided because they were still involved in online gambling. I think that there are so many places that tax money would be better spend than this.
Onto the business side of the issue, the government was very effective with banning it because they effectively regulated banks from allowing US consumers to make transfers to or from an online gambling business. I know that a lot of online gambling websites went under, not to mention a huge loss in revenue from businesses that advertised, supported, or provided services online gambling companies. Hundreds if not thousands of people have lost their jobs because of this.
Looking at the issue from every side, I can really find a single group that was involved with the online gambling business (users, websites, or service providers) that at any point actually wanted the government to shut it down. Seems like the only group that possibly benefited from it were the casinos in the US that lost business from the online companies. In addition to this, the government attached the bill that banned it, to a port security bill that had absolutely no chance of being overturned. The fact that there was never a direct vote on actually shutting down this multi-billion dollar industry shows exactly how much trust the group who added it to the bill had in it being passed.
The actual chance of the bill being overturned is fairly low, but it is nice to see that someone higher up actually has taken notice to the absurdity of the situation.
May 1st, 2007
I was at the ETA conference for a few days this year. Two days seems to be more than enough for any social event in Las Vegas. Red Bull became my best friend after a painful two hours of sleep the first night.
It amazes me how much money goes through Las Vegas, and through the ETA in general. It has to be billions of dollars a day. The Mandalay Bay hotel is amazing, not only in how nice it is, but also by the sheer size of the place. I think that it is about a mile to the conference area, once you are in the hotel.
If you are an ISO or someone looking to see some of the meat of the processing industry, I recommend attending an ETA conference at some point. Even if you get very little out of the seminars, the social aspect of the conference is definitely worth it. Just about every major ISO, equipment manufacturer, and anyone involved in credit card processing will be there. It is a great place to make new relationships, and learn about new products and services.
Anyway, I was able to make it to the EVO dinner at Aureole, the FDR lunch at the Mix lounge (horrible elevator ride to and from the 64th floor), spent some time at the Rumjungle Paybytouch cocktail party, and the rest of the time I was with the whole crew from Way systems. I missed out on Nova’s dinner, but did spend a good hour at the Nova booth catching up on some new information especially related to their Canadian ISO program. I was able to attend a few seminars making a special point to get to the “running a successful free terminal program” seminar with Jared Isaacman (United Bankcard), and Ed Freeman (Total Merchant Services) as the main speakers.
It seems like the FDR acquisition was one of the biggest topics of the event, especially from FDR’s perspective. FDR has some major changes coming up in the near future that will greatly improve the back-end structure for any company that is using FDR platforms. Way systems was also a major topic, as they are showing some amazing growth and potential. So far they have established themselves as the largest wireless terminal provider other than Verifone/Lipman, and the future looks extremely bright for them.
As for the rest of the news, I will be incorporating into the website over the next few months. Thanks for the patience on the lack of posting over the past few weeks.
April 24th, 2007
I will be at the ETA (Electronic Transaction Association) conference through Thursday starting tomorrow. The ETA is the largest payment processing trade association in the world. This year as well as the last five or so are in Las Vegas. Always a good place to have a conference.
Anyway, I may make a post or two on the road. I imagine that I will run into some post worthy information and news this year.
I expect that security topics, contactless payments, and smart card payments will be prominent topics this year, as well as some good debate over free terminal programs and other internally controversial processing topics. I’m hopeful to get some good information while there.
Lastly, if anyone going to Vegas has some extra time, and is looking for a good place to gamble, check out the Casino Royale. It’s probably the last, non-corporate owned casino on the strip. Top-shelf drinks are usually under $5, and the table prices are all reasonable. This may be the only, true to Vegas casino left.
April 16th, 2007
It is truly a sad day today. Kurt Vonnegut died this morning at age 84. He has been my favorite fictional author for a long time now.
In case you haven’t read any of Kurt Vonnegut’s novels, I highly recommend starting. Cat’s Cradle and Slaughterhouse-Five are two of the best books ever written.
A few websites devoted to Kurt:
http://www.vonnegut.com
http://www.vonnegutweb.com
http://en.wikipedia.org/wiki/Kurt_Vonnegut
April 12th, 2007
First Data released this morning that they are to be acquired by the Company: Kohlberg Kravis Roberts & Co. (KKR) for about $29 billion.
This acquisition could in some way affect just about every business that accepts credit cards in the world. First Data is the largest payment processor in the world, and somewhere aroung 60% of all credit transactions are processed through or in some way going through a First Data owned resource.
Link to First Data Press Release »
April 2nd, 2007
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