iSignthis (ASX: ISX) announced on Sunday in a letter to its shareholders that it will be ending its contractual relationship with Visa as a principal member in approximately 90 days in light of upcoming changes from the payments giant.
In particular, iSignthis said in the letter that the proposed rules by Visa, which are set to come into effect in October of this year, will restrict trade and competition. Therefore, the company is in the process of preparing submissions to competition regulators in both Australia and the European Union regarding the impact of the proposed rule changes.
Proposed changes by Visa
In particular, the Payments identity company said that Visa is currently trying to classify regulated electronic money issuers and purchase payment facility providers, such as iSignthis and Paypal, in the same way it classifies unregulated wallets such as Apple Pay. Therefore, ISX would be subject to Visa’s staged digital wallet operator (SDWO) rules.
“The effect of these proposed changes is that the Company would need to choose to be either a principal acquirer, or act as a standalone SDWO, or to have an NTA of more than US$100m if it chooses to be both acquirer and SDWO concurrently,” iSignthis said in its letter to shareholders.
The announcement comes after iSignthis was suspended from Visa, with the payment giant’s website showing that the suspension was done by its anti-Money Laundering division. However, ISX has rejected entirely that it has at any stage processed unlicensed operators.
“The impact of Visa's suspension has seen an interruption to growth, reflected in an overall decline in revenues during March and April. The Company's augmented SEPA instant payment services have seen an increase during May,” ISX said.
“The Company is confident that its instant payment/instant notification service in the EEA is a direct substitute for Visa card acquiring, as Visa acceptance rates in gaming and with securities dealers is lower than with other schemes.”
Finance Magnates has reached out to Visa for comment. As of the time of publishing, we have not yet received a response.
iSignthis: ASX requests are inappropriate
In addition to announcing that it will be ending its relationship with Visa, ISX also said in its letter that the Australian Securities Exchange (ASX) has issued a further query letter seeking more details with its partnership with Visa.
“The Company has advised ASX that it is inappropriate for it to be requesting and releasing information regarding current negotiations and submissions, as it may compromise our ability to reach outcomes of best effect for the Company and shareholders. ASX is insistent, so we have prepared circumspect answers to ASX's queries for release to the market tomorrow. The directors are trying to do the "right thing" for both ASX and our shareholders, although there is some tension between the twin objectives.”
