Shares of electronic payment processor Visa (V) have been punished over the last 3 trading days (ended yesterday) after the U.S. Senate included limits on debit-card fees in its version of the financial overhaul bill. Visa, which owns and operates the world’s largest electronic payment network, is at the center of proposed regulation on interchange fees – a large component of fees charges to merchants for utilizing credit and debit cards.
Illinois Senator Richard Durbin successfully included the measure (after several failed attempts in years past) which limits debit card interchange, or “swipe” fees that are charged to merchants, and gives the Federal Reserve the authority to make the final decision. The fees are charged in connection with the acceptance of payment cards, and while Visa administers the collection and remittance of these fees, the processor generally doesn’t receive a portion of them. Visa is, however, involved in setting the default rate, with its aim to make it appealing to both merchant and card issuer to use credit and debit cards. If the fee is too high, merchants won’t accept the payments cards; if the fee is too low, it’s less worthwhile for card issuers to offer cards at all.
The fees will certainly not disappear completely, and it remains to be seen how much of a change the Fed would institute (if the measure is included in the final bill).
Read more...Bookmark/Search this post with:
