
This is how Visa works - eduardordm
http://eduardo.intermeta.com.br/this-is-how-visa-works
======
hazov
Just to give some context.

RedeConv is a electronic payment company, it does not offer any credit from
what I saw like Visa does, electronic payment is a market that only recently
the Visa brand began exploring in Brazil, offering prepaid cards for payments
of employee meals (this is what Visa Vale is basically), providing means for
this type of electronic payment and offering credit for payments are not the
same thing in Brazil.

In this case the company in question to blame is not exactly Visa but Cielo
that probably is just upset about losing market in electronic payments, which
is what I believe RedeConv provides, Cielo began as a Joint venture between
Visa and some Brazilian banks some years ago, the name of the company was
VisaNet until it was renamed in 2010 I believe, the company is one of the most
profitables in the Brazilian stock exchange where it's listed and its profit
increases after every quarter, I personally own some Cielo stocks.

EDIT: Eduardo, if you can record one or more conversations from merchants
relating about that you can denounce Cielo to the CADE (the Brazilian
equivalent of the FTC). Before doing that you should call a lawyer first so he
can inform you how you should do it legally.

~~~
eduardordm
Just adding: CBSS (now called Alelo) is a Visa company that operates Visa Vale
cards. Cielo is a gateway, actually we are Cielo partners, never had a problem
with them.

~~~
hazov
Good, I stand corrected, anyway look for a lawyer, he will give you proper
recommendations on what to do next.

------
hannibalhorn
Plenty of multinationals play "dirty" in Latin America, I've heard similar
stories about several other companies here from people that work for smaller,
local competitors.

That said, I highly doubt that it's a policy of the home office, it's really
just the end result of hiring people who get results in the region, in a
situation where oversight is difficult to impossible.

~~~
DanBC
> _in a situation where oversight is difficult to impossible._

That excuse no longer washes.

~~~
hannibalhorn
In an ideal world, yes, but I reside in a very similar country, and have seen
and heard too many similar stories to be naive. I think the best thing that
can be done is to blog about it like this; someone in Visa corporate will take
notice and changes will be made, hopefully for the better.

~~~
DanBC
Visa is a multi-billion dollar international company with strict regulatory
controls.

For them to say that "preventing some of our employees from breaking the law
is hard" is not good enough.

I accept that no organisation is going to achieve total legal compliance. But
sometimes it feels as if some companies feel above the law; as if they are
untouchable.

As if, indeed, they are too big to fail.

~~~
dlikhten
"too big to fail"

I wonder if facebook fails, will that be a good thing where a lot of
developers get on the market thus allowing startups to hire :P?

------
K2h
I don't speak Portuguese, but is this the contact info for visa in the region?
[1]. Maybe a few letters to some choice managers there could get Visa to act a
little more responsible. if not, I'd push as high as you can get in the
organization to petition. There is a corporate visa page [2], there may be
something useful in there. [edit] CEO is Joseph Sanders. There may be a PO box
listed for him [3] at

Joseph W. Saunders Chief Executive Officer Visa Inc. P.O. Box 8999 San
Francisco, CA 94128-8999

phone: 650-432-3200 [4]

I had an employee that worked for me dig up the CEO contact info for a big
insurance company and make a stink about a $500 charge and it was taken care
of the next day. hopefully something like that will work for you.

[1] <http://www.visa.com.br/Conteudo.asp?pg=7>

[2] <http://corporate.visa.com/index.shtml>

[3]
[http://www.sec.gov/Archives/edgar/data/1403161/0000000000120...](http://www.sec.gov/Archives/edgar/data/1403161/000000000012022455/filename1.pdf)

[4]
[http://www.labormarketinfo.edd.ca.gov/aspdotnet/databrowsing...](http://www.labormarketinfo.edd.ca.gov/aspdotnet/databrowsing/empDetails.aspx?menuchoice=emp&geogArea=0604000081&empId=558741401)

[5] google search: site:.gov joseph saunders CA

[edit]

1) Portuguese spoken in the region: sorry guys - my lack of world travel
showing.

2) CEO is Joseph Sanders

3) might have found phone number

~~~
kitcar
Small correction, but Brazilians generally speak Portuguese, not Spanish (for
that reason, as well as a few important others such as its size, Brazil is
commonly considered a distinct market from the rest of Latin America)

------
pmjordan
Random idea:

If I remember correctly, the US has extremely strict anti-bribery laws that
apply to bribes made outside the US jurisdiction as well. These might only
apply to government bribes (corruption), but if they apply here too, you could
consider rattling the global Visa parent company's chain in the US in some
way.

~~~
NoPiece
IANAL, but I think the FCPA (Foreign Corrupt Practices Act) only covers bribes
to foreign government officials.

~~~
evolve2k
My understanding is that this is not correct. The US does have strong
AntiCorruption Laws that deal with US entities operating overseas.

Transparency International have good references. <http://www.transparency-
usa.org/links/index.html>

A quick search found this signed by Brazil and US in 1996.

B-58: INTER-AMERICAN CONVENTION AGAINST CORRUPTION

'(3) TRANSNATIONAL BRIBERY.--Current United States law provides criminal
sanctions for transnational bribery. Therefore,it is the understanding of the
United States of America that no additional legislation is needed for the
United States to comply with the obligation imposed in article VIII of the
Convention.'

<http://www.oas.org/juridico/english/Sigs/b-58.html>

------
larrys
"I built a small credit card company, we have around 500k users and 2k
merchants."

URL of this company? Links to some of the merchants that you've lost or
currently have? Clear scan of the document in the photo?

~~~
eduardordm
The company is called Redeconv (www.redeconv.com.br). I didn't want to attract
attention to the company itself, we are just regional. I can provide the xerox
of contracts we had and the forms I'll post that to the blog post later today.

~~~
IsaacL
Regardless of this story, I find it very cool that in Brazil you can just
setup your own credit card company. Are there many regional CC networks like
yours in Brazil? How did you get the idea?

~~~
eduardordm
Credit card company is generic term. In our case we are a PAT (we provide
employees benefits). We never "touch" the money, your employer is, indirectly,
who pays the merchants. We cannot provide loans (credit). For that, we need a
lot of cash (FDIC insurances, etc)

~~~
ciupicri
So what you're providing is similar to meal tickets or coupons?

~~~
vshade
Yes.

------
tomjen3
Before we convict them in the court of public opinion, can we have some
impartial evidence? A single blog post isn't much.

~~~
eduardordm
Very true. The only "proof" I have is testimonial proof and some xerox, this
is why the only thing possible to me to do is a blog post.

~~~
jeremyarussell
If you can I would try and see if you can find more local companies that have
suffered from these practices, get them to post as well and increase the
legitimacy of the claims.

------
vannevar
It might be more accurate for the headline to read "This is how Brazil works."
In the US we tend to take for granted how much a functioning regulatory
system, far from retarding healthy growth, is essential for _promoting_ it.

~~~
rlander
You remark shows that you didn't even bother to read the entire article.

They're not a credit card company, but a provider of employee benefits (hence
they don't even touch the money). They just happen to use small rectangular
plastic cards as a medium for carrying balance information.

~~~
brazzy
I fail to see any connection between your comment and the one you're replying
to...

------
daemon13
Since I was dealing with compliance, FCPA and such for the last 15 years, here
are my two cents:

\- in case people involved in the unethical behavior are either employees of
Visa OR employees of Visa subsidiaries, joint ventures or partnerships, such
behavior does constitute a violation of at least Visa's internal Code of
Business Conduct and Ethics [1], not sure about FCPA due to lack of details;

\- compliance matters are a serious business for most all multinational
companies, especially public/US based;

\- this Code is an internal Visa document, that implies that Reporting any
Illegal or Unethical Behavior [2] shall/can be done by Visa's employees, but
you are not an employee;

I would recommend to write an e-mail, describing your facts, and send it to
4-5 Visa employees, including US HQ. Having multiple recipients, including HQ
people, will ensure that one of those will report this case internally. Your
e-mail will trigger internal investigation of this matter, and hopefully
favorable resolution [i.e. discontinuation of such practices].

Of course, speak with lawyer before doing anything. Also, I would advise
against talking to press, at least for now.

1
[[http://investor.visa.com/phoenix.zhtml?c=215693&p=irol-g...](http://investor.visa.com/phoenix.zhtml?c=215693&p=irol-
govConduct)]

2
[[http://investor.visa.com/phoenix.zhtml?c=215693&p=irol-g...](http://investor.visa.com/phoenix.zhtml?c=215693&p=irol-
govConduct#19)]

------
rroriz
Hey Eduardo, I tried to commend on your blog, but it seems that someone
entered an html tag in the last comment and didn't close it. It screwed your
comment system.

I'm from Brazil too, and this kind of stuff didn't surprise me. But you have
to contact a lawyer and ask for help. Our legal system isn´t the best, but we
have to make some effort to make it better.

Best wishes!

------
andr
While this is preposterous behavior, I am very surprised it's even possible to
operate your own payment card network. Visa/MasterCard is the one monopoly I
thought was practically unbreakable. Even PayPal, who is supposed to be a Visa
competitor, issues Visa cards.

~~~
goatforce5
This happened in Brazil. From the figures in the blog post it seems as though
Visa isn't quite so entrenched there.

~~~
nandemo
Visa is huge in Brazil. However, OP is not exactly in the credit card
processing market (cf. eduardordm's comments in this thread).

------
smartician
I just wanted to give Eduardo a shout-out to build a company that provides a
tangible benefit for low-income families. I know that in the US it's hard for
this segment of the population to get into the electronics payment system, and
I imagine that in Brazil it's similar. It's great to see that the system is
free for the end-user. In the US, most companies that target this market are
predatory and charge exorbitant fees[1], like the now defunct Kardashian
Kard[2]

Somehow I'm not surprised that Visa/Cielo is playing dirty to get their market
share back. I hope you find a way to fight back.

[1] [http://www.nytimes.com/2012/04/26/business/chasing-fees-
bank...](http://www.nytimes.com/2012/04/26/business/chasing-fees-banks-court-
low-income-customers.html?pagewanted=all) [2]
[http://www.reuters.com/article/2010/11/30/us-kardashian-
debi...](http://www.reuters.com/article/2010/11/30/us-kardashian-debitcard-
idUSTRE6AP41S20101130)

------
rotskoff
Whether or not this particular story is true, there is a structural problem
with debit transactions. Neither merchants nor consumers should be penalized
for electronic transactions in which credit is not involved. Perhaps this
means that the infrastructure of bank cards, which was predominantly spread by
credit card companies, would fall on vendors and banks, but my guess is that
they would benefit enough from the increased liquidity that they would want to
create such a system.

Levying a 5-7 percent tax on vendors is simply unfair, when profit margins,
particularly on less expensive items are often less than that.

~~~
casca
There is still reasons that debit transactions should attract a charge. There
is definitely still fraud risk as well as comms/infrastructure/support. 5-7%
is high, but 0% is also unrealistic.

------
lxfontes
More votes indeed.

The sad reality is that you might lose even more ground to Visa. At this stage
it might be worth to get it on camera somehow or ask those merchants to go on
record and take legal actions against Visa. But you likely figured this out
already :)

Boa sorte ! A outra batalha sera com a justica brasileira.

~~~
swah
If he only managed to find out because he had friends, I pretty much doubt
anyone is going to get in trouble with this...

------
chmod775
I just got a VISA-card some weeks ago and I'm going to give it back to my bank
and close the account tomorrow. Good thing VISA's not the only one offering
such services. (I never used it yet anyways)

Some large companies are just not able to have some self discipline. Others
do.

~~~
saraid216
Which?

------
csmeder
This is beyond unethical, what is Jack Dorsey's and Square's board's response?
In my opinion Jack and his board needs to either prove this guy wrong or part
ways with Visa.

Winning at the startup game is fun and all, but standing up for what you
believe in is far more important in the long run.

Am I wrong? Is there something I am missing?

\- [http://techcrunch.com/2011/04/27/visa-makes-a-strategic-
inve...](http://techcrunch.com/2011/04/27/visa-makes-a-strategic-investment-
in-disruptive-mobile-payments-startup-square/)

------
digisign
Don't know if this will help but perhaps you can get the story in the
newspaper?

If not perhaps you could buy some advertising stating that the company's
"death" has been highly exaggerated, why your product is better, and because
people love it so much, even dirty tricks can't kill it.

Avoid negativity and bitterness, keep the message focused (less is more), and
it might help rally the public to your side.

------
camiller
Seems like I have heard this story before. Some local re-seller of Visa
products/services (Visa is in employee benefits???) being overly aggressive is
what it turned out to be. If I had time I'd do some more searching for similar
stories.

------
Fleuri
Indeed what Visa did is not moral, but this is the law of the Jungle, no
matter how despicable they find their opponents to be, losing is losing. They
need real revolution to win the game.

------
magoon
Is anybody really surprised at this?

~~~
debacle
I'm not really hip to the Brazilian legal system, but in the US this would be
highly illegal.

~~~
potatolicious
Sadly, "highly illegal" is often not correlated with "goes to jail", or even
"stopping the behavior".

For example: have you ever wondered about the aggressive charity street
canvassers that have sprung up over the last few years? The people who would
do just about _anything_ to get you to stop on your commute, talk to them, and
hand over your credit card?

The aggressive tactics they employ are often illegal, and many instances of
outright lies and fabrications have been documented.

But that hasn't really curbed the behavior - the charities and canvassing
contractors (yes, they are predominantly for-profit canvassing agencies that
only represent the charities, they are not the charities themselves) know full
well that a great deal of abuse happens, but by keeping everything at arms-
length they can shift blame and diffuse responsibility up the chain.

Whenever a canvasser is caught lying to get the donation, they are a "rogue"
employee, cut loose, and the behavior continues. Whenever this happens at a
large enough scale to attract media attention, the canvassing agency itself is
"rogue" and cut loose by the charity. So on and so forth - nobody _actually_
gets into trouble at any point, except maybe the canvasser on the street who
has nobody to redirect the blame onto.

So yeah, even in the US, if you are savvy (and evil) enough, illegality ain't
got shit on you.

~~~
Paul_S
Same thing happens in the UK, to the point that I thought you were talking
about UK chuggers until I got the last sentence.

VISA's tactics don't surprise me. What is sad is that we think it's OK because
you can do anything as long as you're maximising shareholder value.

------
znowi
This incident is not surprising. On a bigger picture, the whole system of
plastic cards and bank transactions is archaic. As is their elitist attitude.
It feels alien to me to experience in 2012 when cloud operations are so
ubiquitous and cost effective.

How can one justify a fee of 50 euros for a 700 euros transaction except than
greed? It's as if my actual banknotes are being transported, then in principle
it takes a single press of a key.

It is also ironic how big social networks persuade us to disclose all we can
about our private lives, while the banking system remains a secret society
with black magic operations and fees formation.

I really look forward to the guys like Dwolla to disrupt the hell out of them.
Time to move on.

------
mhartl
He needs to talk to a lawyer.

------
anodari
Mafia!

------
random9999
Hi

You stated on March 27, 2012 on your blog [1] having 6K merchants. Have you
lost that many of merchants ??? Without proof it's hard to believe in your
words... Please provide proof and facts and I am sure you will win this
battle. Or at least get some compensation for the 4K merchant losses you have
lost...

[1] - [http://eduardo.intermeta.com.br/square-should-have-its-
own-c...](http://eduardo.intermeta.com.br/square-should-have-its-own-card)

~~~
eduardordm
We have 2k employee-benefits merchants and more than 10k in general now.

