SAN FRANCISCO, July 25, 2012 /PRNewswire via COMTEX/ –Visa Inc. (NYSE: V) today announced financial results for the Company’s fiscal third quarter 2012 ended June 30, 2012. On a GAAP basis, the Company reported a net loss of $1.8 billion, inclusive of a litigation provision of $4.1 billion, related to the previously announced settlement agreement in the Multi-District Litigation case. Visa’s share will be paid from the previously funded litigation escrow account established pursuant to the Company’s Retrospective Responsibility Plan.
Excluding the litigation provision of $4.1 billion and related tax benefit, adjusted net income for the quarter was $1.1 billion, or $1.56 per diluted class A common share, an increase of 25% over the prior year on an adjusted basis. The adjusted weighted-average number of diluted class A common shares outstanding during the third quarter was 675 million. The Company’s adjusted quarterly net income per share of class A common stock is a non-GAAP financial measure that is reconciled to its most directly comparable GAAP measure in the accompanying financial tables.
GAAP net operating revenue in the fiscal third quarter of 2012 was $2.6 billion, an increase of 10% over the prior year and driven by strong double-digit growth in service revenues, data processing revenues and international transaction revenues. There was no significant impact on current quarter results related to the strengthening or weakening of the U.S. dollar over the prior year.
“Visa once again reported solid global growth in payments volume, cross border transactions and processed transactions outside the U.S., executing on our strategy of growing the electronification of payments worldwide. We are pleased that we were able to come to a resolution in the merchant litigation which was acceptable to most parties while ensuring the long-term health of the U.S. payments industry,” said Joseph Saunders, chairman and chief executive officer of Visa Inc. “As we look forward, we remain focused on launching new payment solutions and products for our financial and merchant partners and consumers, while supporting the Visa brand and the advancement of electronic payments.”
Call them “swipe fees,” “checkout fees,” or “surcharges,” consumers may have to deal with a new expense at the register if they pay with a credit card, thanks to a $7.25 billion settlement reached Friday.
MasterCard, Visa, and a few big banks reached a “memorandum of understanding” to resolve claims brought by a class of U.S. retailers in 2005 regarding the fees merchants have to pay to accept credit card transactions. (Read Visa’s statement here and MasterCard’s statement here.)
As the Electronic Payments Coalition pointed out, “As part of the settlement, retailers negotiated the ability to charge their customers a checkout fee (merchant surcharge) at the register.”
Visa and MasterCard agreed to temporarily reduce so-called swipe fees, which are paid by the merchant to the card association when credit cards are used. The settlement, which is pending court approval, gives merchants the right to recover the swipe fees from consumers.
There are some consumer safeguards to curb abuses, the Electronic Payments Coalition noted:
* “Merchants are only allowed to assess a fee that is equivalent to what they pay to accept credit cards – which in the U.S. is typically between 1.5 percent and 3 percent.
* Consumers can only be charged checkout fees for credit card usage. Merchants cannot charge customers for the use of their debit card.”
Retailers must disclose the fee on the receipt, at the point of sale and at the point of entry, according to The Consumerist.
While the settlement pertains to MasterCard and Visa, the Consumerist explained, there other card brands are open to surcharge treatment. “Now that Visa and MasterCard have opened the floodgates to credit card surcharges, merchants are free to tack on the surcharge for Amex and Discover purchases,” The Consumerist said.
Perhaps merchants may choose not to impose a surcharge for fear of scaring off price-sensitive customers. MasterCard’s general counsel Noah Hanft said as much.
“We know that merchants care about their customers and anticipate that they will not impose checkout fees, particularly because the value merchants derive from card acceptance far exceeds their costs,” Hanft said. “However, throughout the litigation and as a condition for resolution, the merchant plaintiffs sought a change to the current rule and we focused our efforts in settlement negotiations to ensure consumer safeguards were included.”
Keep in mind, surcharging is illegal in 10 states: California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma and Texas.
Customers worry about theft of their data. You should worry about business fallout.
More than 340 million computer records containing sensitive personal information have been involved in security breaches in the U.S. since 2005.1 Now criminals are shifting sights to small merchants because many have lax security for cardholder data. More than 80% of attacks target small merchants. If you are at fault for a security breach, business fallout can be severe:
Fallout from a data breach
As a small merchant, you face the potential of many negative forces from a breach of cardholder data:
Fines and penalties
Termination of ability to accept payment cards
Lost confidence, so customers go to other merchants
Cost of reissuing new payment cards
Legal costs, settlements and judgments
Higher subsequent costs of compliance
Going out of business
What data thieves are after
The object of desire is cardholder data. By obtaining the Primary Account Number (PAN) and sensitive authentication data, a thief can impersonate the cardholder, use the card, and steal the cardholder’s identity.
Sensitive cardholder data can be stolen from many places:
Compromised card reader
Paper stored in a filing cabinet
Data in a payment system database
Hidden camera recording entry of authentication data
Secret tap into your store’s wireless or wired network
Defining “sensitive cardholder data”
Everything at the end of a red arrow is sensitive cardholder data. Anything on the back side and CID must never be stored. Everything else you store must be for a good business reason, and that data must be protected. PCI DSS explains how. Read more.
Q: What is PCI? A: The Payment Card Industry Data Security Standard (PCI DSS) is a set of requirements designed to ensure that ALL companies that process, store or transmit credit card information maintain a secure environment. Essentially any merchant that has a Merchant ID (MID).
Q: To whom does PCI apply? A: PCI applies to ALL organizations or merchants, regardless of size or number of transactions, that accepts, transmits or stores any cardholder data. Said another way, if any customer of that organization ever pays the merchant directly using a credit card or debit card, then the PCI DSS requirements apply.
Q: What are the PCI compliance ‘levels’ and how are they determined? A: All merchants will fall into one of the four merchant levels based on Visa transaction volume over a 12-month period. Transaction volume is based on the aggregate number of Visa transactions (inclusive of credit, debit and prepaid) from a merchant Doing Business As (‘DBA’). In cases where a merchant corporation has more than one DBA, Visa acquirers must consider the aggregate volume of transactions stored, processed or transmitted by the corporate entity to determine the validation level. If data is not aggregated, such that the corporate entity does not store, process or transmit cardholder data on behalf of multiple DBAs, acquirers will continue to consider the DBA’s individual transaction volume to determine the validation level.
Merchant levels as defined by Visa:
Any merchant — regardless of acceptance channel — processing over 6M Visa transactions per year. Any merchant that Visa, at its sole discretion, determines should meet the Level 1 merchant requirements to minimize risk to the Visa system.
Any merchant — regardless of acceptance channel — processing 1M to 6M Visa transactions per year.
Any merchant processing 20,000 to 1M Visa e-commerce transactions per year.
Any merchant processing fewer than 20,000 Visa e-commerce transactions per year, and all other merchants — regardless of acceptance channel — processing up to 1M Visa transactions per year.
* Any merchant that has suffered a hack that resulted in an account data compromise may be escalated to a higher validation level.
What does a small-to-medium sized business (Level 4 merchant) have to do in order to satisfy the PCI requirements?
A: To satisfy the requirements of PCI, a merchant must complete the following steps:
Identify your Validation Type as defined by PCI DSS – see below . This is used to determine which Self Assessment Questionnaire is appropriate for your business.
Complete the Self-Assessment Questionnaire according to the instructions in the Self- Assessment Questionnaire Instructions and Guidelines.
Complete and obtain evidence of a passing vulnerability scan with a PCI SSC Approved Scanning Vendor (ASV). Note scanning does not apply to all merchants. It is required for Validation Type 4 and 5 – those merchants with external facing IP addresses. Basically if you electronically store cardholder information or if your processing systems have any internet connectivity, a quarterly scan by an approved scanning vendor is required.
Complete the relevant Attestation of Compliance in its entirety (located in the SAQ tool).
Submit the SAQ, evidence of a passing scan (if applicable), and the Attestation of Compliance, along with any other requested documentation, to your acquirer.
I’m a small merchant with very few card transactions; do I need to be compliant with PCI DSS?
All merchants, small or large, need to be PCI compliant. The payment brands have collectively adopted PCI DSS as the requirement for organizations that process, store or transmit payment cardholder data.
Q: If I only accept credit cards over the phone, does PCI still apply to me? A: Yes. All business that store, process or transmit payment cardholder data must be PCI Compliant.
Q: Do organizations using third-party processors have to be PCI compliant? A: Yes. Merely using a third-party company does not exclude a company from PCI compliance. It may cut down on their risk exposure and consequently reduce the effort to validate compliance. However, it does not mean they can ignore PCI.
Q: My business has multiple locations, is each location required to validate PCI Compliance? A: If your business locations process under the same Tax ID, then typically you are only required to validate once annually for all locations. And, submit quarterly passing network scans by an PCI SSC Approved Scanning Vendor (ASV), if applicable.
Q: Are debit card transactions in scope for PCI? A: In-scope cards include any debit, credit, and pre-paid cards branded with one of the five card association/brand logos that participate in the PCI SSC – American Express, Discover, JCB, MasterCard, and Visa International.
Q: Am I PCI compliant if I have an SSL certificate? A: No. SSL certificates do not secure a Web server from malicious attacks or intrusions. High assurance SSL certificates provide the first tier of customer security and reassurance such as the below, but there are other steps to achieve PCI Compliance.
A secure connection between the customer’s browser and the web server
Validation that the Website operators are a legitimate, legally accountable organization
Q: What are the penalties for noncompliance? A: The payment brands may, at their discretion, fine an acquiring bank $5,000 to $100,000 per month for PCI compliance violations. The banks will most likely pass this fine on downstream till it eventually hits the merchant. Furthermore, the bank will also most likely either terminate your relationship or increase transaction fees. Penalties are not openly discussed nor widely publicized, but they can catastrophic to a small business.
It is important to be familiar with your merchant account agreement, which should outline your exposure.
Evaluate with a Self-Assessment Questionnaire
Most small merchants can use a self-validation tool to assess their security for cardholder data. The tool includes a short list of yes-or-no questions for compliance. Click on the Self-Assessment Questionnaire number that best describes how you accept payment cards.
More than one-third of consumers used a mobile phone to make a purchase in 2012, up from less than 20 percent a year ago, according to a new report from Massachusetts-based consultancy IDC Financial Insights. In its eighth annual Consumer Payments Survey, IDC identified PayPal Mobile, Amazon Payments and iTunes as the most popular mobile payment services.
IDC found mobile payments are spread essentially evenly among payments made via smartphone apps, mobile browser, contactless payments and text message. At least 30 percent of respondents reported being interested in making payments through each of the four methods. So, while the report says that statistic “bodes well for the growth of the various digital and mobile wallets that have been introduced last year…it appears that consumers have not decided on a favorite mode, so scheme operators will have to continue supporting a variety of modes and platforms.”
Contrary to its expectations, IDC also found that more consumers used mobile devices to purchase physical goods (about 72 percent) than digital goods (65 percent) or online services (61 percent). The report says “this is good news for companies that are focused on working with brick-and-mortar merchants, such as LevelUp, PayPal, and Square.”
Smith & Wesson Holding Corp.’s (SWHC) fourth-quarter earnings surged as the gun maker saw sales volume continue to grow and operating expenses declined.
Shares were up 15% after hours at $7.95 as the company beat quarterly expectations and projected upbeat full-year and first-quarter results. As of Thursday’s close, the stock was already up 58% on improving gun sales.
For the new year, the company projected earnings from continuing operations of 60 cents to 65 cents a share and net sales of $485 million to $505 million. Analysts polled by Thomson Reuters expected 50 cents a share in earnings and $466 million in sales.
The company also expects first-quarter earnings from continuing operations of 16 cents to 19 cents a share on net sales of $125 million to $130 million. Analysts predicted 12 cents a share and $113 million, respectively.
Wedbush Inc. said this week that concerns about industry deceleration proved “premature,” as gun demand has picked up since December and should continue through the summer. The firm said consumers appear to be reacting again to the prospect of tighter gun-control laws under President Obama. This concern drove strong gun sales after the 2008 presidential election and could be re-igniting sales during an election year.
Smith & Wesson has said its efforts to maximize internal manufacturing capacity and speed up deliveries from component suppliers contributed to the higher sales in the latest quarter.
The company consolidated its Thompson/Center Arms operations into its Massachusetts headquarters during the fiscal third quarter as it looked to increase shipments and improve margins. The company also has worked to divest itself from its perimeter security business in order to focus on its core firearm operations.
At the end of the quarter, Smith & Wesson’s firearms backlog was $439 million, more than double from a year earlier and from the end of the previous quarter.
For the quarter ended April 30, Smith & Wesson reported a profit of $12.5 million, or 19 cents a share, up from $1.1 million, or 2 cents a share. The latest period included an after-tax loss of $5.3 million from the discontinued security business, while the prior year included a loss of $3.2 million in such losses. Analysts most recently projected earnings of 17 cents.
Revenue grew 28% to $129.8 million. The company last month raised its revenue guidance to $129 million.
Gross margin widened to 36.1% from 30.7%, thanks to higher sales volume, reduced promotion costs and a favorable product mix, the company said. Operating costs were down 8.8% amid cost-cutting efforts.
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Electronic Transfer, Inc. offers merchant services, merchant accounts and credit card processing to accept Credit Cards. ETI has helped merchants with their Credit Card Processing since 1989 - This web site is for Merchant Accounts, Credit Card Processing, Virtual Terminals, Credit Crad Terminals, Payment Gateway, Wireless Credit Card Terminals and iPhone Credit Card Processing.