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Visa Plunges Following Fed Announcement On Interchange Fees, JP Morgan Estimate On Debit Fee Hit
Visa, which over the past several months, has become one of the darling momo names, shows just how stocks take the escalator on the way up, and the elevator on the way down. The reason, is that per the just released statement by the Fed, Ben Bernanke will cap interchange fees which will directly impact Visa and Mastercard's top line. And another shocker: per a just released note from JPMorgan, the Fed may end up cutting 80-90% of debit fees chages by the credit card companies.
And here is JPM's take:
News: The much anticipated initial Fed rules on debit card interchange fees and routing are out. The staff memo is 14-pages long (the notice is 163 pages long) and presents several alternatives for industry comment. Expected stock reaction for V/MA: negative - no final resolution on key issues, negative cases still on table. Here’s our first look summary of the key watch items:
• No network exclusivity – seeking comment on two alternative approaches. Alternative one says no network exclusivity can be satisfied with a second unaffiliated PIN-network – we believe this is the positive outcome hoped for by the market. Alternative two requires a second network for both signature and PIN - this is a negative, if implemented, in our view.
• Debit interchange rate– a few alternative frameworks are presented for comment, but it looks like 7-12 cents or 80-90% cut from the blended average (or about a 40% cut from the lowest PIN rate). Alt 1: based on avg variable cost for auth, clearance, settlement - with a safe harbor min of $0.01. Issuers with costs above $0.07 would be able to recover costs up to a cap of $0.12 cents. Alt 2 presents a cap of $0.12. As a point of reference, we estimate current blended U.S. debit interchange at about 1.0-1.3%. The Fed fee cap would be reevaluated by the Fed every two years.
• Rebates (to prevent circumvention and evasion). According to the memo, "the proposed rule would prohibit an issuer from receiving net compensation from a network for debit card transactions. For example, any compensation provided by the network to the issuer, such as per-transaction rebates or incentive payments, could not exceed the total amount of fees paid by the issuer to the network.” This suggests the networks cannot rebate more than the fees they charge the issuers for network services.
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Has populism jumped the shark?
They should also ban chargebacks. Chargerbacks create risk for small business.
....and where is the hit to AMZN, NFLX and all the plastic trough feeders?
Why would this be a bad thing for retailers?
The opposite, I would imagine.
How will this encourage people to spend more?
Banks pass off the transaction fees to retailers. Those fees are lower.
They don't have to spend more, retail sales profits just jumped without selling a single thing.
these savings won't be passed on to the buyer. They'll be absorbed by the company to help with their absolutely, abysmal, sales figures.
Unless I am totally misunderstanding this, this is just a way to help retailers recover from the "misses".
Why won't banks convert DC to CC and solve the fee issue that way?
BAH, just a bunch of BS central planning socialism. No one makes out here, .12 fee big freakin deal who cares no one is out there retail shopping anyway. Just more regulators with their grubby mitts in everything.
Back to the long aggravating lines at Publix waiting for housewives to write checks for 3 onions 'cause hubby don't trust the lil lady with cash
No one makes out, 'cept those who're trying to manipulate particular economic indicators.
On the other side of the coin, this is straight up regulatory capture of an "industry" that provides a service to the banking "industry".
A snake just swallowed a rat.
looks like the banks are squeezing everyone out, i listened to a table full of mortgage brokers sit around and bitch b/c they are capping their fees
Visa must know you are talking about them. There is a Visa advt on ZH.
Precisely. Retailers should, if anything, get a boost from this. At the least it'll help their (collapsing) margins, at the most it'll actually have some marginal decrease in the prices they offer consumers. I'm not understanding the logic of how this would force people into credit cards... in Europe the debit card is far and away more popular and widely used than its nefarious cousin the credit card (and the debit interchange fees are a third of what they are here), making it cost less for merchants/people to use the debit cards could be a good step to getting people to pay for stuff with cash they actually have rather than cash they'll get sometime in the future.
If there fees for use won't peeps use alts?
This is the end of debit cards. Everyone into the CC pool !! Buy V and MA.
The card is dead long live the card
LOL yea the credit card mania is BACK! FED herding the sheeple back into credit card applications, run em on up sheeple and pay 30% interest!
...and annual fees of $50 and late fees of $50 and and and
Huh? This is great news for retailers. Headline should read... "Fed screws credit card companies, hands Christmas gift to retailers, Consumers still get shafted."
Buy. The. Dip.
in a week
"I put my hand up on yo hip. When I dip, you dip, we dip."
-quad city dj's (I think)
http://www.youtube.com/watch?v=dZPQdZLyHYE
Freak Nasty!
Buy. The. CRASH.
One of Robo's darlings
That looks like AEM -6 %...... support broken, next stop Oct/Sep......
We shall placate the masses by cutting their fees!....hear hear (grumblings of agreement)...turn off the cameras...time for the cigars, port and dancing girls our work is done here boys.....
Did they not just cook this up ?
(to make the WikiLeaks dip look like a regulator-slap-in-the-face dip ?)
Is this truly the role of the Fed?
Guys watch closely this price action (67 now). S&P will follow suit in ‘the day of reckoning’ that is approaching by the hour…
VISA and MC shoudl really think about buying a bank or applying for a bank holding company status... to get on the Feds' "good" side
this is what the dow futures chart will look like overnight, anytime now!
Sure if you turn it upside down. Why do you folks sit around wishing and hoping for something, Just go with the flow, make some free money.
haha, a corporation that chose to stooge for the government gets timely comeuppance. LOVE it! What perfect party favor for Assange's release!
We are headed fast towards socialism. Next up, burgers cannot be priced more than a $2.
maybe the first phase of becoming a cashless society
You are 10 years too late and it's fascism anyway.
Farcism. Fascism with a clown nose and rainbow afro wig.
"We are headed fast towards socialism."
LMAO. Did you just wake up from a decades-long coma?
"Next up, burgers cannot be priced more than a $2."
Or they'll say that 1 hour of labor can't be priced at less than $8. Or that the price of loanable funds can't be less than 0.01%/annum.
We stopped for a bathroom break at Socialism 80 miles ago. Our final destination is some weird blend of Marxism and Fascism.
The stock indexes won't drop, if they do the index futures will rise overnight and the loss like magic is gone. This truly is a risk free. Just look at the price action, every tiny dip is gobbled up by hungry buyers with limitless funds. This is so easy a cave man can do it.
Right, thats what happens from here on out now, no stock market drops ever again.
Meredith Whitney comes to mind... poor girl.
Man, I stand corrected on the idea that watching The Bernank talk about credit card fees was useless. I had no idea his appetite for destroying the value of things was still not satisfied.
Sweet! I hate Visa anyway.
Go Bernank!!
LOL, it bounced at 66.6!
I think someone heard Obama say "This might be a good time to buy Visa"
Crap.
I thought he said 'pizza'.
what am I gonna do with all of this YUM?!
SPY still within a hairsbreadth of new highs.
Has barely sold off given all the PIIGS, bond market turmoil, currencies and metals bouncing around like superballs....
Robot, I've a serious question for you.
What do you think the "top" for the DJ30 will be (assuming QE3, QE4, etc.)
14,000? 20,000?
We're already at the levels of June 2008.
Top what you saying infidel there is not TOP!
I got your TOP right here.
BUY THE DIP you HIP .
LOL, funny, since RainbowTrader and Ponzi are the same guy.
LOL he/she/tranny is talking to his hand puppet
Nucor totally shucked off the bad news today.
Buy low and sell high.
don't be a cow man..or woman..or tranny..or android
semi-interesting pathology
perhaps it's a cow woman
This is bullshit and will never happen.
and house prices never go down
and no one will put their hand up my wifes ass
TSA and history say it can happen.
Bush tax cuts are still in place: WHERE ARE THE JOBS? Starting with the Rothschilds and the private bank cartel families, any method to get them fighting among themselves, cool (don't waste your time with "republicans, democrats, bernanke, obama"). Linguistics determine perception.
Locally, the more US bank families destitute and on food stamps, the better.
jobs ? that's so 90s
uh they are called traders or investors or maybe homeowners didn't you get the memo?
jeeeezzzzzzz
And look at all the "dip buyers" rush in. $100 by COB tomorrow, I guarantee it! (At least that's what one of the expert traders who post on Yahoo! finance message boards told me).
Hopefully this was intended as a joke. This one appears stuck in the 70-80 zone.
This is a shakedown. Obviously Visa and Mastercard were remiss in paying their protection money.
I say just go back to writing checks and watch the big banks suffer as they lose billions in processing hours needed to process the transactions.
remote capture boys.
got ya coming and going.
thank you
I'm waiting for a top. So far, I don't see one yet.
Retail stocks and banks must show signs of rolling over first. Usually the market tops about 6 weeks after those groups start rolling.
But if we get a commodity boom like we did in 2007, it could be 6 months later.
Most inflationists are not bearish on stocks, never have been. US stocks continue to get their ass kicked compared to foreign stocks and metals. And by foreign, I dont just mean China.
So true. Meanwhile, data shows inflation is terrible for companies (given lag between pricing and cost) and deflation is actually earnings/share positive. However, given that this is data.....
dead people don't roll over
Like I said , NO TOP NEVER Bernank has outlawed TOPS.
Now where are the babes!
I was wondering why neither V nor MA were on the Goldman Sack conviction list. Silly me. I shoulda known the Bernack would make a courtesy phone call.
Matters not in the slightest to me. I use a cash kickback cc for everything I can. It's only 1% but keeps me in cigarette money.
Someone please remind which of the two FED mandates - maximum employment or price stability - this action falls under. Am I missing something?
!. Price stabliity affected positively--people stop spending when that have to write a check for a pack of gum.
2. Full employment affected positively--banks will have to hire thousands to process all those checks that will be written
anyone know the reason behind 2.6 mil call volume for XLF and 6.3 mil call volume for SPY? perhaps tradestation data is incorrect.
XLF dec 15 call has a lot of Volume.
I'll only answer gunpowder plot questions on Guy Fawkes night
straight up inflationary.
direct effects: less profiteering off debits = less banx offer debits = less debit use = more deposits to fractionally reserve.
indirect effects: plastic toggling = more credit use = more currency borrowed into existence.
moral of banx story: when you use complicated language and esoteric terminology, and imply things rather than state them, you capitalize on peoples reluctance to admit their own obtuseness (what does that word mean?), and entice people to draw conclusions that you did not directly state, respectively.
skullduggery is trouncing liberty.
and they still ran that bitch, Ms. Market, up to the close. Holy shit. Nonetheless, somebody bought 40,000 VXX at 16:02 for 39.50 (+1.25%from close, followed by 343,000 at 16:06 for 39.4676. I don't get it; trade is down to 39.11 now....who knows?
This is the thank you Ben Bernank gives to the creditcard companies for freezing the payments to Wikileaks.
"Visa, it's everywhere you want it to be, even below the 200day moving average."
One word: Good!
Well I support this decision but I have to wonder where the Fed obtained the authority to make this decree.
From reading the comments, just about everybody here is clueless as to what this means. For a change, it's GOOD for consumers, though the issuers of debit cards may want to recapture some of the lost profits by charging the card holders for debit card use, which is probably what will happen.
and BTW: the fees in Europe are about 1/8th of what they are in the US (1.2-1.5%). It is also a boost for retailers, so the uptake is yes, this will help retailers with their margin squeeze.
this will only matter when the mini card swipe dohicky is integrated into iphone/ipad thingy
though I am wondering how many DC pos locations that will no longer be viable due to lower profitability.
It's actually "take the stairs up and the elevator shaft on the way down".