We remember years ago when the banks explained that interchange fees helped cover losses from fraud, yet that concern is way down on the factors threatening this offering. Instead, this phrase, "...cause us to become insolvent" is higher on the list of risks and is associated with the merchant interchange multidistrict litigation, which might force Visa Inc. to pay substantial damages.
Last evening, CNBC asked whether Bank of America® was using its new [nearly doubling] $3.00 ATM surcharge for non-customers to bail out from the sub prime mortgage disaster? A bigger question is whether the banks, many of which had also owned MasterCard, and reaped billions after its IPO, are using this IPO to not just bail out from their mortgage malaise, but to run for the exit and pawn off the potential litigation liability on to the public? But, remember, the alleged crime of illegal price-fixing by agreement did not occur when the public owned the stock, but rather, under the banks watch.
The CNBC segment discussed how non-customers using the Bank of America ATM network are paying fees twice; talk about double dipping. The same happens billions of times each day with the Visa and MasterCard® payment network too. Interchange fees are paid twice, once to the issuing bank, and then to the acquiring bank, and in many cases, it is the same bank!
[Source: WayTooHigh.com]
