Visa IPO - What Does it Mean to Merchants?
This month will herald the IPO of Visa. Yes, dear readers, Visa is going public in what promises to be the biggest IPO in history. The experts tell us the IPO could amount to almost USD 19 Billion. That is Billion with a B.
What does this mean to merchants?
I’m not a financial analyst but I don’t see how a shift of business operations of this magnitude can’t NOT affect all the entities involved - card holders and merchants alike. You can bet that member banks and Visa will benefit.
Is this a bailout for Visa?
According to a recent article in CNN, if the IPO is successful, more than $10 billion of the proceeds will go to member banks to help them recover some of the losses from their bad credit decisions and the rest will go to Visa to help cover the legal costs of all the lawsuits they’ve lost lately. Fine and dandy, but the lawsuits aren’t likely to stop any time soon, nor are the lending practices of the member banks. Member banks are the guys that are offering low or zero percent teaser rates to the people that can least afford the whopping high rates at the other end of the teaser.
So what’s changed?
Now the Association called Visa has stockholders to answer to. A lot of stockholders. They are going to have to pay dividends and those dividends translate into making more money. That money has to come from somewhere. Anyone want to comment on who’s going to pay?
