Visa and Mastercard: The Mortgage Brokers of the Credit Card Industry

seeking alpha ^ | 4/12/08 | ma

[Flavius]

There is definitely a shift from cash to credit cards worldwide, just as there was a shift from renting to home ownership based on the wide availability of mortgages, but is only a matter of time before this comes to a screeching halt.

Visa (V) and MasterCard (MA) get paid a fee which is equal to a percentage of each transaction, and have no credit risk. Mortgage brokers have no direct credit risk either and they get an upfront fee when the transaction closes. If a borrower defaults, mortgage brokers do not lose a penny. The losers are those who bought the securitized mortgages. Mortgage brokers were doing great until borrowers began to default. The rating agencies downgraded the debt, and now, it is virtually impossible to securitize pools of mortgages. There are still plenty of houses for sale, but the number of transactions has plummeted, and the unemployment rate among mortgage brokers has skyrocketed.

[Vince Ferrer]

not quite sure I understand why VISA and MC "have no credit risk," unless he's referring to the securitizing of of their receivables (recovering asap what they have paid to merchants).

From what I read around the time of the VISA IPO, VISA and MasterCard never hold your debt, it is their affiliated banks which do that. VISA gets the transaction fee when the transaction is processed, and acts as a middleman and a brand name. So if that is correct, it has no default risk, but in a recession it may have a slowdown in transactions.

[Ramcat]

I think there is no risk to MC & VISA because they're just clearing houses for the transactions. The banks or financial institutions who issue the cards hold at least some of the risk with the rest being sold as securities.
Warning!!!
This nugget is coming from someone who can't balance their own checkbook.

[Ramcat]

I can't drive to a mall and back for $6.
Call me lazy (bitter) but I'd pay an additional $6 not to go to the mall and have my purchase come to my door.

[mylife]

These people blow.What do they Spend on these commercials? Who pays for it? The consumer

[muggs]

I don't mind paying shipping and handling. To go to the mall costs gas, wear and tear on the car and me (I hate shopping) plus if I went to the mall I would probably buy some kind of junk food that I don't need,thus costing more to avoid shipping and handling.

[ovrtaxt]

lol you’re in a mood today!

[mylife]

Visigoths

Raping and plundering, I'm sure it's all a good joke. FU Capitol One

[mylife]

Damn skippy!

[ovrtaxt]

Well lighten up, Frances. It’s almost April 15th! yay!

[mylife]

W00h00! we’ve just seen the full glory of taxation!

[Phantom Lord]

These people blow.What do they Spend on these commercials? Who pays for it? The consumer

The consumer pays for all advertising by businesses. Why should Capital One get knocked for it when 100% of businesses operate that way?

[ovrtaxt]

Hey, look on the bright side. At last you’re paying the IRS with freshly depreciated dollars.

You’re screwing them for a change! haha

[mylife]

I just hate capitol one. They suck. they are the worst of the worst, Predatory pricks

[ex-Texan]

Good post! *BUMP! . . .

There was a caller on Coast-to-Coast last week who said something like: 'If you are late for one payment on one credit card, all your credit card pile on. They raise required payments and interest rates.' The caller was really angry. He was hyping a national revolt against credit card companies . . . Already, it kind of sounds like people are getting outraged out there in Middle America.

The credit card companies are getting more greedy and more ruthless every day. They are paying millions in bribes to politicians. The new Bankruptcy Act is the result. They have a new business plan in place now. It's called 'rape, pillage and burn down the middle class.'

I think Dave Ramsey has the right idea. The goal is to become 100% debt free. Pay off all your credit cards and then cut all of them up. Except for one. Pick Visa or MC. Toss a coin to choose. Then use it for small purchases only and pay off the bill in full when it comes in the mail.

[mylife]

True that!

[Phantom Lord]

Also, a lot of online retailers do not charge S&H and charge far less for nearly all items than B&M.

Plus, NO TAX!!!

[Gorzaloon]

I don't mind paying shipping and handling. To go to the mall costs gas, wear and tear on the car and me (I hate shopping) plus if I went to the mall I would probably buy some kind of junk food that I don't need,thus costing more to avoid shipping and handling.

Those have been my feelings for years, plus often there is no State Sales tax. This offsets the shipping.

Plus, what is a Saturday Morning worth, even paying yourself the minimum wage?

Also, the nearest large mall to me is of a type such that I have to carry my .45. This makes me walk funny and get tired.

For a few bucks, a guy in a brown suit carries the stuff up my sidewalk...AFTER I have comparison shopped from a number of vendors in a few minutes and gotten even further savings.

I am prepared to give up the social benefits of mall shopping.

I know, it is a huge sacrifice to miss getting through packs of throwaway teens, getting through the parking lot, and missing the joy of Flu Season with other shoppers barking like dying seals. Or the sweet fulfillment of reading of a sale, and finding the items understocked or sold out, if they were ever there in the first place.

I will miss the challenge of being accused of shoplifting by someone who cannot read and write. And what of the challenge of inventing new languages in an attempt to communicate with the sales help, or practicing an old one that I have already learned with the other shoppers?

[mylife]

Capitol one bought out my car loan. Here is one of their stunts: Ya know how there is a late fee on most payments? And most of these Jazzhats play games like sending the bill 3 days before the penalty kicks in so you are bound to miss the payment date? Well... Capitol One doesnt do that, They are above board. They just ask for the full payment AND THE LATE FEE as if it was your regular bill.

The turds. I got to watch them all the time. My business with them is done. No more

[mylife]

Here is what really chaps me. I didn’t enter into business with Capitol on or BOA, but you find yourself in bed with these dickheads despite your best efforts to avoid them.

[mylife]

You sign an agreement and then you wake up on a Sunday morning to find the RULES have changed