Bundle of investment news: Amazon vs. Visa and Scammers' Rewards

Пачка инвестновостей: Amazon против Visa и награды для доносчиков

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, luckily for investors.

Disclaimer: when we talk about, that something has grown, we mean comparison with the same quarter a year earlier. Since all US issuers, then all results are in dollars. When creating the material, sources were used, inaccessible to users from the Russian Federation. Hopefully, 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 the field of e-commerce, and the other is from the world of transactions, sooner or later had to come together in battle. And it happened: Amazon (NASDAQ: AMZN) will stop accepting Visa payments on its platform, to be released in the UK from 2022, due to a sharp increase in commissions. In connection with the completion of the UK exit procedure from the EU, Visa has increased the commission on payments using its cards in 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 it turned out to be enough for Amazon. Large companies can easily create a legal entity in Europe to conduct transactions with customers. But small entrepreneurs, exhibiting their products on the Amazon platform, this is, sure, will not be able to - which will negatively affect Amazon's business in Europe as a whole.

Amazon has long been angry with Visa over 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 enough reason to end the relationship with Amazon in the UK, but I still think, that this story has a second bottom. У Mastercard, eg, in the UK the commissions are almost the same, like Visa, - but Mastercard is not kicked out of the platform. Anyway, until.

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The thing is, 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 unprofitable retail craze is funded and funded by AWS - and to the detriment of the latter. If the retail business continues to hang like a weight 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 is not too conspicuous for investors and does not anger them.

High transaction costs for Amazon are costs, which would be good to chop, so that Amazon's retail business remains at least at the lower payback limit and does not slip into a loss, because there are already calls.

Amazon recently partnered with Affirm, an installment payment service, Also, next year, payments via PayPal will be available on the platform. I think, that Amazon will continue to develop alternative payment systems bypassing traditional processing companies.

As for Visa, then Amazon's initiative is a very bad sign for her. I don't think, that the loss of the British part of Amazon's business would ruin Visa reporting, but extradition may continue: Amazon will expel Visa from 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 in the end will not affect its reporting in 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 expense item in the near future.

In the short term, from the situation with the confrontation between Visa and Amazon, possibly, will win Mastercard. truth, Amazon's body movements do not bode well over long distances: having dealt with Visa, the company will take on Mastercard.

As I can see, various fintech startups are in the best position here, payment channels offering Amazon bypassing processing systems like Visa: they may well be bought if not by Amazon itself, then one of her major partners, for example PayPal.

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Knock knock on the US stock market

American Securities Commission (SEC) shared a status report with informants. The report takes into account those company employees or informants, who write to the SEC about cases of violation of the law by their employers. These 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 leads was a record. And here is how the number of all leads was distributed:

  1. Stock manipulation - 3090.
  2. Incomplete and / or unreliable display of facts in reporting - 1913.
  3. Listing Fraud - 1910.
  4. Intervention in the bidding process and pricing - 778.
  5. Cryptocurrency trading - 762.
  6. Violating the rules of insider trading - 417.

Geography. Leads came from almost every country in the world. Most of the leads after the USA came:

  1. From Canada - 248.
  2. China - 152.
  3. Great Britain - 132.

SEC has paid a record amount of awards to whistle-blowers this year: 564 million dollars for 108 people. For you to understand, how much is that: from 2011 to 2020 inclusive, the SEC issued $ 562 million to 108 scammers. Yes, this is a record.

Пачка инвестновостей: Amazon против Visa и награды для доносчиков

Why the SEC report is important and what it talks about

Scammers and generous rewards for them are an important part of a working system of supervision of companies on the exchange.. What is the point of a person reporting abuses in his company, if he is not rewarded for it in any way and if it harms his reputation and career? SEC's generous compensation successfully encourages doubters to report incidents of corporate misconduct.

Yes, news about, that some company has deceived shareholders or misled regulators, can hurt the value of stocks in the short run - 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 generally turn to zero, as, eg, was with Enron.

There is nothing surprising in the fact, 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, the constant threats from the SEC towards the electric car startup Nikola and its intervention turned out to be rather positive. Otherwise the guide, most likely, Would "arrive" to bankruptcy already in September 2021, but the updated Nikola is still alive and floundering.

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ESG all gates

SEC obliged to disclose ESG metrics in its reporting. Considering that, that there are still no uniform standards for calculating ESG metrics and all companies consider them differently, great risks, that in the case 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 volume 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.

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