On Monday, Visa Inc announced it would buy Visa Europe Ltd in a deal worth 21.2bn Euros (£15.09bn).
Whilst Visa Inc and Visa Europe previously operated under the same company known as the Visa International Service Association, in 2007 most units merged to form Visa Inc, leaving Visa Europe as a separate entity.
The most active bank in the Visa Europe network is Barclays and is predicted to make up to 1.2bn Euros in total, sharing proceeds with over 3,000 companies.
The chief executive of Visa Inc, Charles Sharf, has said;
“We are very excited about unifying Visa into a single global company with unmatched scale, technology and services…Together we will bring the power of electronic payments to more people, in more places, than ever before.”
Chirantan Barua, from Bernstein Research is less optimistic about the merge stating;
“Now that the banks will be ‘external’ to the payment system they will see their fee income margin start to be squeezed and we wouldn’t be surprised if Visa tried to increase the margins in Europe at the expense of the banks. As well, given the nature of the deal, the banks will not be able to switch providers for at least the first few years.”
The deal, which is still subject to regulatory approval, was supported fully by the boards on both sides and is expected to close in the third quarter of 2016.
Shares, which have increased by 18% this year, slipped by 1.2% in premarket trading.
