News for hackers. Stuff that matters.

A comment on Visa, Mastercard mull increasing fees for processing transactions: WSJ. Parent comment

Re:Visa, Mastercard mull increasing fees for processing tran... by jasode on Friday February 15, 2019 @12:47PM (#19172979)
Several forces would contribute to both VISA and MC changing fees at the same time.

- the typical open and transparent "price signaling" where competitors can "see" others' price changes. Similar to one airline immediately changing (matching) a ticket price in response to another airline lowering or raising its price. Same mechanism as Amazon bots constantly web scraping Best Buy and Walmart and Best Buy in turn scrapes Amazon. Everybody is constantly monitoring everybody's prices.

- Visa and MC have overlap of owners[1][2]. 4 out of the top 5 owners are the same for both: Vanguard, Blackrock, FMR, State Street

- Visa and MC have overlap of member banks that also have minority ownership

Yes, you were being sarcastic about the coincidence but it seems like the natural economic equilibrium is for both to have near identical network fees.

[1] Visa top 5 institutional stockholders: https://www.nasdaq.com/symbol/v/ownership-summary

[2] MC top 5 institutional stockholders: https://www.nasdaq.com/symbol/ma/ownership-summary

[ Parent | on HN ]
Re:Visa, Mastercard mull increasing fees for processing tran... by chrisbolt on Friday February 15, 2019 @01:14PM (#19173234)
The overlap of owners means nothing, as those are mutual funds or ETFs that are the top owners of most stocks on the market.
[ Parent | on HN ]
Re:Visa, Mastercard mull increasing fees for processing tran... by prickledpear on Friday February 15, 2019 @02:29PM (#19173934)
These mutual funds and ETFs actively participate in corporate governance, and the overlapping ownership of most stocks in the market is a very underrated problem.

Economists have found evidence that as ownership concentration increases, firms act more like a monopoly.

See this paper for one example in the airline industry: https://onlinelibrary.wiley.com/doi/full/10.1111/jofi.12698

[ Parent | on HN ]
Re:Visa, Mastercard mull increasing fees for processing tran... by nebolo on Friday February 15, 2019 @08:20PM (#19176360)
Participating in corporate governance and actively forming corporate strategy is a very different issue. And to my knowledge, ETFs and mutual funds do not participate in any meaningful way in management, i.e. they do not act as activist investors.
[ Parent | on HN ]
Re:Visa, Mastercard mull increasing fees for processing tran... by jasode on Saturday February 16, 2019 @06:54AM (#19178227)
>And to my knowledge, ETFs and mutual funds do not participate in any meaningful way in management, i.e. they do not act as activist investors.

There's been a trend towards more activism with passive indexes. One example with Blackrock's passive fund:

https://www.afr.com/business/larry-fink-says-blackrock-will-...

[ Parent | on HN ]
Re:Visa, Mastercard mull increasing fees for processing tran... by sjjshvuiajhz on Friday February 15, 2019 @01:35PM (#19173446)
It seems relevant - if company leadership is attempting to act in the best interests of the shareholders, the fact that the shareholders also own their competitors would tend to bias them against engaging in a price war (even one that they would have a good shot at winning).
[ Parent | on HN ]
Re:Visa, Mastercard mull increasing fees for processing tran... by currymj on Friday February 15, 2019 @03:29PM (#19174425)
there’s an ongoing debate about whether this situation actually does pose an antitrust problem across many industries.

it’s at least not totally implausible.

[ Parent | on HN ]
Re:Visa, Mastercard mull increasing fees for processing tran... by theshortofit on Saturday February 16, 2019 @08:36AM (#19178484)
IMHO, the Card Brands are an Oligopoly Industry so they have pricing power and therefore raise prices because they can. Add on the fact they are public companies with their investors ( your list) hounding them for better returns leads to price increase abuses.
[ Parent | on HN ]
Re:Visa, Mastercard mull increasing fees for processing tran... by theshortofit on Sunday February 17, 2019 @07:08PM (#19187735)
Good post!
[ Parent | on HN ]