Sep 30th
Posted by M·CAM Analytical Team in Patently Obvious
This week’s Patently Obvious report focuses on the patent holdings of Visa, Inc. With the Wall Street Reform and Consumer Protection Act recently signed into law on July 21, 2010, major credit card companies have found themselves subject to new financial regulatory restrictions arising from the Durbin amendment.
This amendment allows the Federal Reserve to issue rules to control the interchange fees credit card companies charge merchants for each transaction. Based on the idea that the margin between the revenues generated by fees unfairly exceeds the cost incurred to process these transactions, proponents of the Durbin amendment suggest that the savings created by the regulation will give merchants opportunities to expand employment as well as pass on savings to consumers.
Conversely, the legislation presents both revenue and brand value challenges to companies like Visa (NYSE: V) at a time when the public image of financial institutions is tarnished. Coupled with the growth of alternate payment networks like PayPal and Google Checkout, it is reasonable to assume that the credit and debit card marketplace will be a far more challenging environment in the future.
For Visa to stay competitive in this increasingly complicated atmosphere, it would be in its best interest to align its innovation with consumer confidence and trust. However, to fully explore this strategy, Visa must look beyond its current revenue model and seek out new alliances or partnerships where integration and innovation can provide greater adaptation to the changing financial services ecosystem and new sources of earnings. To do this, one approach is to look at aligned and non-aligned technology and business sectors where Visa innovations have complimentary interdependencies with third party innovations. In what we refer to as non-aligned sector or “orthogonal” market analysis, M•CAM looks at unanticipated alliances which, if combined, could facilitate new market positions of accretive value.
This report focuses on entities of interest with patents and innovations that predate or coexist with the holdings of Visa, as well as public-domain alternatives.
Please read the full Patently Obvious report by clicking HERE.
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