Visa Europe preparing to sell out to Visa and then compete

The relationship between global chains and Visa has always been complicated, but it looks like the payment game is about to get even more complex.

Visa Europe has always been a very distinct entity, one that cooperates with Visa Inc., but not much more. Now, the banks that own Visa Europe are looking to set up a competing European payment system.

Here's the twist: due to a contractual clause, the Euro renegades could force Visa Inc. into the deal, taking potentially more than $3 billion from Visa (a possibly crippling amount, even for Visa) and using it to fight against Visa, according to a Wall Street Journal report.

In the standard risks area with Visa's SEC filings is a direct reference to this possibility: "The transaction would require Visa Inc. to borrow funds or sell stock, and could reduce its net profit. The exact value of the deal will be determined using a formula based on projected financials of both Visa Inc. and Visa Europe," the Journal reported.

Even though they share a brand, Visa Inc. and Visa Europe are separate entities that run their own clearance systems. The U.S. firm is a payments-technology business listed on the New York Stock Exchange, while the European organization is owned by financial institutions and operates under a license, irrevocable in perpetuity. Visa Europe is a minority stockholder in Visa Inc., and the U.S. company receives royalties from Europe. Visa Inc. earned $55 million in operating revenue from Visa Europe in the fourth calendar quarter of last year.

For more:
- see this Wall Street Journal piece (sub. req.)

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