September 2, 2003
Written by Bob Meyer, Editor of BarterNews
Credit Card Technology Undergoing Revolutionary Change
Barter Industry Should Take Note and Re-energize Itself
New technology will soon see significant breakthroughs in how credit and debit cards are used and processed. This, in turn, will impact the commercial barter industry which is moving toward swipe technology.
(Editor's Note: Awareness of this information is important to the barter industry, as the need to create easier "seamless" barter transactions grows in our quest to stay abreast of the business community's desires.)
Visa USA has just passed the $1 trillion mark in transactions per year; it reached the billion-dollar level in 1971. (Debit, credit, prepaid and commercial transactions are now processed at a rate of $32,000 a second.)
Visa started as a credit card company, but in the mid-1990s they made a concerted effort to mainstream debit transactions. Today debit is 51% of the transactions, 30% of sales volume, and growing at 25% year over year.
According to Carl Pascarella, CEO of Visa USA, personal consumption expenditure is about $17 trillion. Visa accounts for 12% of that, and all the other card programs combined make up roughly another 12%. He feels Visa has just scratched the surface in providing value to consumers and giving them the opportunity to use whatever payment device they want, whenever they want.
Visa is busily looking at new payment devices. Among the products and services are payroll cards for the un-banked. Companies now have the opportunity to pay their employees with a safe and secure Visa payroll card, which can be reloaded and used everywhere Visa is accepted. No need to go to a check-cashing service and paying a fee, or carry around large sums of cash. (Trade exchanges provide their business members with a somewhat similar service, called a sub-account, whereby employees can have their own barter card for trade purchases.)
Another innovation is the Visa Commerce Program, aimed primarily at business-to-business purchases. Authentication of the buyer and seller is required, after which they can use the Visa infrastructure to facilitate transactions. Visa says the key to the success of their programs ultimately revolves around educating the consumer.
(The barter industry's goal should parallel Visa's...provide a payment solution for the business community. This is an ambitious goal that would pay huge dividends, then the energy and dynamism evident years ago would reappear!)
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The Changing Face Of Labor
Monday was Labor Day in the U.S., and a good time to look to the future and where we're headed.. With the world's largest work force in China, historic change is underway. Even though China's economic development is in it's infancy, it is positioned to determine world production-cost levels, and therefore prices, for many everyday goods.
U.S. companies are investing heavily in China, believing "if you-can't-beat-them-join-them." Ford Motors recently announced they would buy $1 billion in auto parts from China next year, and expect to reach $10 billion a year soon, as car parts from China cost 30% to 40% less than those produced in the United States.
There's talk about forcing China to increase the value of its currency, the yuan, causing its goods to be more expensive and therefore less competitive in Western markets. But global economics aren't that simple.
China now runs a trade surplus with the U.S. of $100 billion a year, but they've also invested around $96 billion in U.S. government securities last year—keeping U.S. interest rates relatively low.
If China raised its currency value, and suffered reversals in its development, then their investment in U.S. Treasury Bonds would most likely diminish, forcing U.S. interest rates to rise.
Bottom-line...there is no easy answer. Just realize that an historic process is underway which will have an affect on all of us.
Extraordinary Revealing Report For Business Owners - Click here.
Homestore's Barter Arrangement Shows Versatility Of This Business Tool
Homestore, the No. 1 Internet real estate firm, has settled a stockholders' lawsuit regarding puffed up revenue in 2000 and 2001 when the dot-com balloon began to deflate.
The $71 million settlement has a major barter component included, in that the lead plaintiff, the California State Teachers' Retirement System, will receive 20 million shares of Homestore stock ($2.90 per share) and the balance in cash.
The law firm representing CalSTRS agreed to be compensated in the same mix of stock and cash as their client. Acquiring shares in the company provides the retirement fund with the possibility of further benefit if the company grows in value.
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Quote of the week...
"Some regard private enterprise as if it were a predatory tiger to be shot. Others look upon it as a cow that they can milk. Only a handful see it for what it really is—the strong horse that pulls the whole cart."
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NBC's "Fear Factor" Barters With Mandalay In Deal Worth $400,000
The Mandalay Resort Group, which owns the Mandalay Bay, the Luxor pyramid casino, the Excaliber and others, is bartering with NBC.
NBC television gets to film the Mandalay's gambling halls and other rooms, plus they receive 820 room-nights at the Mandalay, Luxor, and Monte Carlo resorts for the "Fear Factor" crew and contestants...as well as 2,100 free meals.
In exchange, the Mandalay gets a giant product placement built into the shows that can't be zapped by viewers' remotes or recording devices. Mandalay Group President Glenn Schaeffer estimates the one hour "Fear Factor" exposure is worth millions. "It's a great infomercial," he exclaimed.
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