Visa will soon stop working on the site Amazon in the UK - and this could be the prologue to a brutal war between companies. Meanwhile, the SEC rewards scammers, fortunately investors.
Disclaimer: when we talk about, that something has grown, we mean a comparison with the same quarter a year earlier. Since all issuers are from the USA, then all results in dollars. When creating the material, sources were used, inaccessible to users from the Russian Federation. We hope, Do you know, what to do.
The toad forbade the viper: Amazon kicks out Visa
It was inevitable: two colossus of the stock market, one is from e-commerce, and the other from the world of transactions, sooner or later they had to fight. And it happened: Amazon (NASDAQ: AMZN) stop accepting Visa payments on its platform, to be released in the UK from 2022, due to a sharp increase in commissions. Due to the completion of the procedure for the UK's exit from the EU, Visa has increased the commission for payments using its cards when transactions between parties in the UK and the EU: it used to be 0,3% for credit and 0,2% for debit cards, and care 1,5% for credit cards and 1,15% for debit.
Visa officials said, that this change will affect less 5% companies in the UK, but that was enough for Amazon. Large companies can easily create a legal entity in Europe to conduct transactions with customers. But small businesses, listing their products on the Amazon platform, this, certainly, will be beyond our strength - which will negatively affect Amazon's business in Europe as a whole.
Amazon has long been mad at Visa for high fees. Previously, the company added a commission 0,5% when using Australian and Singaporean Visa credit cards, to offset local commissions. And in the UK, Amazon even offers English users 20 pounds discount for the use of any means of payment, except Visa.
Visa fees are good enough reason to cut ties with Amazon in the UK, but i still think, that this story has a second bottom. У Mastercard, for example, in the UK the commissions are almost the same, like Visa, - but Mastercard is not kicked out of the platform. Anyway, till.
The fact, that Amazon is interested in developing other payment channels. Amazon is, in fact, two different businesses under one roof: big, but a low-margin e-commerce platform and a brilliant high-margin cloud service - AWS. Amazon's Lost Retail Craze Is Funded and Existed by AWS—and to the Detriment of AWS. If the retail business continues to hang weights on AWS, then activist investors will want to split Amazon into retail and AWS—with the expectation that, that the shares of the latter will grow stronger than the retail part of the business due to the better business model. Therefore, Amazon management wants to do so, so that the inferiority of retail Amazon does not catch the eye of investors and does not anger them.
The high cost of transactions for Amazon is a cost, which would be good to chop, so that the Amazon retail business remains at least at the lower payback line and does not roll into a loss, because there are already calls.
Amazon recently partnered with installment payment service Affirm, Also, next year, payments via PayPal will be available on the platform. I think, that Amazon will continue to develop alternative payment systems that bypass traditional processing companies.
As for Visa, then the Amazon initiative is a very bad sign for her. I do not think, that the loss of the British part of Amazon's business would ruin Visa reporting, but extradition may continue: Amazon will kick Visa out of other regions and/or demand a discount. Other major retail players may follow Amazon's example. In this case, Visa will have to make concessions and make discounts - which will ultimately affect its reporting in a not the best way.. Visa's marketing expenses in the last quarter grew by as much 58% year to year - so I would expect, that Visa will have to increase this item of expenditure in the near future.
In the short term, from the situation with the confrontation between Visa and Amazon, maybe, will win Mastercard. Truth, over long distances, Amazon's body movements do not bode well: dealing with Visa, the company will take over Mastercard.
As I can see, various fintech startups are in the best position here, offering Amazon payment channels that bypass processing systems like Visa: they may well be bought if not by Amazon itself, then one of her big partners, for example PayPal.
Knock knock on the US stock market
American Securities Commission (SEC) shared a status report with whistleblowers. The report takes into account those company employees or whistleblowers, who write to the SEC about violations of the law by their employers. Here are the numbers in the report.
Hovering. In 2021, the SEC received 12.2 thousand leads - almost in 2 times more, than in 2020. To understand the situation: already in 2020, the number of pickups was a record. And here is how the number of all leads was distributed:
- Stock manipulation - 3090.
- Incomplete and / or unreliable display of facts in the reporting - 1913.
- Fraud with the withdrawal of shares to the exchange - 1910.
- Intervention in the bidding process and pricing - 778.
- Cryptocurrency trading - 762.
- Violation of insider trading rules — 417.
Geography. Leads came from almost all countries of the world. Most of the leads after the USA came:
- From Canada - 248.
- China - 152.
- Great Britain - 132.
The SEC has paid out a record amount of awards to whistleblowers this year: 564 million dollars for 108 people. To make you understand, how much is that: from 2011 to 2020 inclusive, the SEC issued $562 million to 108 whistleblowers. Yes, this is a record.
Why the SEC report is important and what it says
Scammers and generous rewards for them are an important part of a functioning system of supervision of companies on the stock exchange. What is the point of a person reporting abuse in his company, if he is not rewarded for it in any way and if it will harm his reputation and career? Generous SEC Compensation Successfully Encourages Doubters to Report Corporate Malpractice.
Yes, news about, that some company was defrauding shareholders or misleading regulators, can hurt stock prices in the short term - but if you constantly turn a blind eye to it, then the number of problems will grow exponentially and then everything will end in bankruptcy, and stocks will go to zero, how, for example, was with Enron.
There is nothing surprising in that, that 2021 was such a positive year for the US stock market: it is actively cleaned from scammers. Strictly speaking, it is this kind of strict oversight that protects the shareholders of even such giants, like Microsoft or Adobe: they do not deceive shareholders solely because, that the risks of, that information about this will come out with the most unpleasant consequences. For example, constant threats from the SEC towards the electric car startup Nikola and its intervention turned out to be rather positive. Otherwise the guide, probably, would “arrive” for bankruptcy as early as September 2021, but the updated Nikola is still alive and floundering.
ESG all the way
SEC required to disclose ESG metrics in its reporting. Considering that, that there are still no unified standards for calculating ESG metrics and all companies consider them differently, great risks, that in the event of the introduction of mandatory disclosure of ESG indicators, the SEC risks drowning in bureaucratic hell: she will receive thousands and thousands of denunciations of the sample “company X incorrectly calculated the amount of carbon dioxide emissions into the atmosphere, because ... "And, analyzing numerous applications of this kind, SEC risks overlooking more important corporate health issues. I see this risk as significant enough to, to take it into account.
