NEW YORK – Some analysts are suggesting that the success of Visa’s recent initial public offering, which has further loosened the ties between the card networks and the banks that spawned them, has revived speculation that a major issuer might eventually set up an independent network on its own.
By doing so, analysts are proposing, an issuer would eliminate the costs of subsidizing the brand names of Visa and MasterCard Inc. and retain the processing fees it now pays to their networks. “And observers said there is less downside to such a move now that the banks have cashed out much of their holdings in Visa (whose IPO last week, the largest ever, is now estimated to have raised more than $19 billion) and MasterCard (which went public nearly two years ago),” reported America Banker, an affiliate of Credit Union Journal.
There remain big challenges, however, not the least of which would be achieving the breadth of acceptance and consumer adoption required for a network to succeed would be a steep challenge.
