Wednesday, May 16, 2007

"Visa, CEO Preparing for Initial Public Offering" (The Mercury News)

The below excerpt from an an edited transcript of an interview with Mercury News personal finance reporter Mark Schwanhausser and Joseph W. Saunders, who was just named chairman and chief executive of Visa Inc., was published on May 16, 2007. However, it very well could have mirrored the identical arguments made by the railroad industry in the late 1800s, when they too tried justifying why farmers needed them to bring their goods to market. Back then, there was no Antitrust Act, but it was the force which caused its creation - to stop collusion to illegally fix prices.

For Mr. Saunders to opine that "we're not as far apart [on the rebellion against interchange fees] as some people may think" is distance from our prospective.

As a merchant, ecommerce business owner and lead plaintiff who is on the front line - dealing with consumers every day - we know differently. The reality is that our customers, along with fellow business owners continue to applaud our efforts, even as more merchant interchange fees continue to increase. We are about as far apart as were the framers in the late-1800s who faced monopolistic controls by the railroad titans who forced unbridled rate increases while applying talking points parroted by Mr. Saunders.

[from The Mercury News, see link]

Q How do you plan to soothe merchants who are rebelling over interchange fees?

A Ironically, I think we work on that all the time. Even while this litigation is going on, we've made a number of arrangements with a number of merchants, and I would say we're not as far apart as some people may think. It's a situation where we need each other. We provide services for them, and they provide an outlet for us. We need to continually work to make sure that relationship improves over time. It's clearly something we need to work on.

Q Is the key relationships or pricing?

A It comes down to the point when merchants feel there is value for the service we provide. Now, remember that at this particular point in time Visa does not have direct relationships with the merchant. The relationship is through the banks and third parties. The rub is that the suit is about the interchange rates. But it does still come back to showing the merchant that there is value in what we provide. And there is a lot of value, by the way.

[source:, via The Mercury News, May 16, 2007]