In spite of turbulence in Russia affecting Visa’s international transaction networks, Visa is lowering the fees and pruning requirements for merchant acquirers. The cutback of rates could be up to as much as 50%. These new policies from Visa come in the wake of the credit giant’s push for industry cooperation for security and the coming switch to EMV technology.
The EMV technology will give a dramatic boost to card security while eliminating the classic magnetic strip for credit and debit cards. The system, already in place in Europe, is scheduled to be implemented in the United States within the next year. Some credit card holders are already being asked to prepare to change credit cards as soon as August 2014.
Visa and MasterCard have both spearheaded an effort to cooperate with the electronic payments industry as a whole in the wake of high profile security breaches jeopardizing customer credit card information.
Increased transparency and collaboration will help to reduce security concerns in an industry that has been caught in poor light following hackers breaking into Target, Michael’s, Smucker’s and other large retailer databases.
Visa’s changes come at a difficult time for the company. Political unrest over the situation in Ukraine has led to the United States implementing economic sanctions against Russia following its annexation of Crimea. These sanctions have forced Visa to refuse transactions to two of their banking partners in Russia with the possibility of more being added to that list.
In response, Russia has put wheels on its plan to create an electronic payment network under the Central Bank of Russia. The existence of such a network would put Visa, as a foreign company, at a severe competitive disadvantage.
The setbacks in Russia, however, are set off by gains in Japan as Visa has acquired majority shares of the Japanese GP Network Corp in addition to Total Systems Services Inc.