Wednesday, April 1, 2009

European Union Drops Fine Threat after Mastercard (MA) Drops Fees

Darn socialists who try to look out for their people - they keep messing with these capitalistic exploitation plays. Don't they realize government is for the large corporation and by the large corporation? (plain as day in the Constitution section 42.1-A "He who pays for political campaigns shall deem to get favors of the highest order) What sort of outfit do they run over there across the pond? Mastercard (MA) is down 5%ish this AM on this agreement to cut its fees in return for the European Union to lay off... thankfully US citizens (Cramerica) do not have such regulators looking out for their interest. In fact when the credit card companies said they wanted tougher bankruptcy laws, US lawmakers jumped and asked how high! Only now in the teeth of national emergency do politicians duck for cover and side with consumers "those evil credit card companies! we'll find out who passed all this evil legislation and get 'em!" [Dec 18, 2008: New Limits on Credit Card Companies; in a Related Note - Hell Freezes Over]

It appears these type of cross border transactions are only 5% of MA's payment volume in Europe, but it's quite the haircut on a percentage basis. That's ok; they can raise fees in the US to offset it. Works great in the drug maker business model!
  • European Union regulators said Wednesday they would drop a threat to fine MasterCard after the company promised to temporarily cut fees it charges for cross-border card purchases which can hike costs for shops. In December 2007, the European Commission threatened the company with daily fines unless it scrapped the multilateral interchange fees that can discourage retailers from accepting payment cards from another EU nation.
  • Regulators say they will now monitor how MasterCard changes the way it charges these fees, which should from July be capped at 0.3 percent for credit card purchases and at 0.2 percent for debit card sales. These fees varied in 2007 from 0.8 percent to 1.9 percent for credit cards and from 0.4 percent to more than 0.75 percent for debit cards. (that is a quite substantial % drop)
  • MasterCard Europe said these new fees would only be in place until an EU court hears its appeal against the regulators' 2007 ruling to end the fees altogether — and said they were high enough to support its business of processing payments in the longer term.
  • Crossborder purchases are less than 5 percent of MasterCard's total payment volume in Europe, it said.
  • The EU executive warned that it was still investigating Visa, which was keen to stick to an average 0.7 percent interchange fee for processing credit and debit card payments outside the cardholder's country.
Technically today's drop has pushed Mastercard down below to its 20 day moving average of $160. I am going to add to the position here in the $158s and see if the stock falls to $154 which is the 50 day moving average.

Long Mastercard in fund; no personal position

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