Try the new FT.com

January 29, 2006 10:26 pm

Visa to split up overseas divisions

  • Share
  • Print
  • Clip
  • Gift Article
  • Comments

Visa International is preparing to turn its divisions in Asia, the Middle East and Latin America into separate companies as it adapts to the growth of credit card transactions and more scrutiny by retailers and regulators.

Christopher Rodrigues, chief executive of Visa International, said the move would be a logical step in a transformation that has already seen Visa’s business in the US and Europe become separate entities.

“As the business continues to grow we look at our corporate form and ask, ‘Have we got it right?’” he told the Financial Times. “We expect that over time the unincorporated regions will become incorporated.”

Visa and its main rival, Mastercard, are under attack by retailers in the US who accuse them of anti-competitive behaviour over the amount they charge to process payments on their networks. Competition authorities in Europe are also examining the charges, known as interchange fees.

The scrutiny has prompted the credit card networks to make themselves more transparent and independent from the banks that are their shareholders.

Last year, Visa’s US arm said its board would have a majority of independent directors, while Visa International recommended that all its regions have at least two independent directors.

Mastercard is pursuing an initial public offering in a move that is widely seen as an attempt to demonstrate its independence.

Mr Rodrigues said a decision to incorporate its remaining regional networks would be driven by the performance of those regions, some of which have experienced huge growth as credit cards increasingly replace payments by cash and cheque.

In the year to last September, Visa’s operations in Asia-Pacific processed card transactions worth about $560bn, or about 14 per cent of the global total.

“This has nothing to do with regulation and everything to do with the maturity of the business,” Mr Rodrigues said. However, he said it was unlikely that Visa would follow Mastercard in pursuing an IPO.

Financial services executives are concerned by the lawsuits filed against Visa and Mastercard in the US by large retailers, who seek billions of dollars in damages and would undermine the structure of the credit card industry if successful.

The executives argue that US financial regulators, which oversee the banking system, have long been aware of the system of interchange fees but have not chosen to challenge it.

Michael Lafferty, chairman of the International Card and Payments Council, said: “A loss of tens of billions of dollars, whether through a court judgment or an expensive settlement, could bankrupt the global cards industry.”

Copyright The Financial Times Limited 2017. You may share using our article tools.
Please don't cut articles from FT.com and redistribute by email or post to the web.

  • Share
  • Print
  • Clip
  • Gift Article
  • Comments

NEWS BY EMAIL

Sign up for email briefings to stay up to date on topics you are interested in

SHARE THIS QUOTE