Viva la Visa

The champagne bottles must be popping in San Francisco tonight as the Visa, USA clan celebrates the company’s stock offering. By most measures, the stock offering exceeded expectations. Some online reporters have remarked that today’s close of almost $60 is $20 higher than even the most enthusiastic estimates.

This is an interesting chapter is Visa’s history. Not long ago, the company was being investigated by the U.S. Department of Justice for anti-competitive business practices. My how far they’ve come…

For most of its life, the Visa organization was technically an “association” of financial companies, which paid a membership fee to Visa – and in many cases MasterCard – to build and maintain the “pipes in the ground” that make up part of the credit card industry’s payment network. In other words, Visa does not – and has never – issued cards. They have helped banks, which keep the credit card accounts on their books, process the transactions on behalf of consumers and the outlets that accept the cards.

Visa attracted unwanted attention from the DOJ in the late 1990s because of its Board structure and by-laws that prevented member institutions from doing business with competing payments systems a.k.a. American Express and Discover. As a result, the DOJ contended, the payments industry and consumers suffered.

It was a long legal battle, but, in the end, the DOJ prevailed and the associations were forced to make changes. MasterCard became a public company first. Today, Visa followed – in a big way.

So, what’s in store for consumers now? Will this development make our lives any better? Maybe some of the money will go to improving the expansive network further so the company will – in fact – be “everywhere” we want to be. Maybe, the, money will go to new technology that will make electronic payments even easier going forward. Maybe, the cash infusion will enable the company to reduce it’s merchant fees, which continues to be a source of agitation. Only time will tell, but there is one thing we know for sure: today’s IPO was a resounding success.

 

Google and the Street. Microsoft and the Hill

I’ve finished John Battelle’s Search and there is room for one last comparison of Google and Microsoft. Battelle dedicates a chapter (or two) to Google’s IPO and the fallout associated with it. In the end, Battelle suggests the organization would have done at least a few things differently to avoid the blowback from observers that thought the company and its leadership had no respect for the process on Wall Street.

Sounds like 1998 on Capitol Hill when a young Bill Gates testified before the Senate Judiciary Committee (without a jacket) and talked about the technological revolution in a way that left all Senators on the Committee feeling disrespected. Gates didn’t follow the rulebook and people were pissed. Google wanted to do things differently with its IPO, and people were pissed.

In both cases, critics used words like “arrogant,” “ignorant” “ill advised” and “”young.” Getting people to understand the world that you live in is hard, at least in part, because they are always trying to get you to do the same. In both of these cases, there were powerful forces on both sides and everyone was trying to tell their story. And who has the best story to tell. The wonderful inventors/creators or the guardians of Wall Street and Capitol Hill? So much for change.