Tuesday, April 8, 2014

Lawsuit between Walmart and Visa

The recent drop of 2.7% is due to the lawsuit between Walmart and Visa Inc. Walmart has sued Visa Inc. for a total of $5 billion USD. This is with regard to a allegedly high amount of card swipe fees taken by Visa during the various retail transactions of Walmart. There was no immediate response from Visa Inc. for this lawsuit. This case is based on strong precedent set by the $5.7 billion settlement Visa and MasterCard agreed in a class-action regarding the same matter. Meanwhile, Walmart has announced that it will switch its branded cards from Discover to MasterCard. This is a win for MasterCard and a missed opportunity for Visa Inc. In addition, Visa Europe is expected to slice down the rate that it charges for card transactions in Poland. It is also known as the interchange rate.The increase has been done of 0.5%, from 1.2 to 1.3 percent. The reduction will be effective from 1st of July. As more and more retailers seek direct entries into the mobile payment industry, big retailers no longer want to share as much of their thin profit margins in paying electronic-transaction fees. They see mobile-based digital wallets as a way of circumventing Visa and its peers to keep more of their revenue for themselves.

In the Russian side, the suspension has been withdrawn, Russia has decided to have its own domestic payment system within six months to become more self dependent in the future. It is hard for Russian to start a new payment system, since Visa and MasterCard hold the lion’s share of plastic card market in
Russia.So it seems difficult for Russia’s planned domestic payment service to compete against these card giants.

No comments: