Visa Launches Business Network on Facebook, MasterCard and AmEx Settle<< More Activity Around Mobile Payments | Main | Holiday Week Wrapup – Russell-ing up signs of trouble in Bank Stocks >> Ed Kountz | June 26, 2008, 12:10 PM Overall, the use of social networking services to research financial services products remains small…an upcoming JupiterResearch report (due out in July) will show that, at present, less than 2 percent of all online users turn to social networking sites when researching financial products. Yet more than a quarter of young affluents (online users 25-34, who make more than $75,000 a year) rely on the advice of friends or acquaintances for such information, and it is clear that the emergence of targeted, corporate social networks (such as LinkedIn and Plaxo) offer an important platform from which to reach, and learn through the experiences of, one’s peers. Of note, then, is Visa’s launch of the Visa Business Network on Facebook (LINK) earlier this week. Visa bills the network as the “first ever application dedicated to connect businesses on Facebook,” and promotes the service as a way to share business ideas and ambitions via virtual networking among the 80,000 small business owners already on Facebook. The service is a centralized portal for connections and support, both from peers and experts, through: Certainly, other attempts to leverage social networking have occurred in the cards space. Chase's relationship with Facebook, of course, was an early example, and American Express maintains its own small business blog and resources page via the Open network at LINK/. While the dimensions of effective social marketing of cards or financial services products are still evolving, both Visa's and AmEx's efforts attest to the opportunities that exist in becoming the trusted problem-solver, particularly for startups, whose resources and experiences are generally less-extensive than for their larger business brethren. And with CBS news recently highlighting the growing impact of the credit crunch on small businesses' access to credit, I expect the number of small business owners who fund aspects of their operations via small business card will continue to increase. Read the views of JR colleague Sonal Gandhi on the topic of marketing FS to small businesses at LINK Note--This report appears in our SMB practice, so may not be accessible without a subscription to that service. In another corner of the cards industry, MasterCard and AmEx have announced a settlement in AmEx’s antitrust lawsuit against its rival, in which AmEx charged that MasterCard blocked it from issuing its cards through banks. In the settlement, MasterCard will pay 12 quarterly payments of $150 million to AmEx, beginning in Q3 2008, and expects to book a $1 billion charge related to the settlement in the current fiscal quarter. The case will now be dismissed, and neither party admitted to liability. Those with long memories will note that this is just the latest legal chapter in the cards space, and originated in 2004 after the US Supreme Court left intact a ruling which allowed Visa and MasterCard member banks to issue rival networks’ credit cards. AmEx CEO Ken Chenault noted in a statement that the funds would be a buffer at a time of slowing economic activity, the effects of which we've noted in recent presentations, and which I blogged about in a recent entry ("While Retail Overall Struggles, Online Makes up the Distance"). LINK |
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