💳 Visa + Mastercard’s swipe-opoly

Swipe left… Your local grocery and Disney have a common enemy: card fees. This spring, Visa and Mastercard hiked the “swipe fees” they charge merchants for card purchases. FYI: merchants can pass swipe costs on to shoppers. Visa and Mastercard process 83% of US credit cards and earned $55B+ from swipe fees last year. But the duopoly is under scrutiny:

• New rules: The Senate’s finalizing a bill that would boost payment competition by forcing banks to use several partners, versus exclusively using Visa or Mastercard. More competition’s expected to reduce fees by $11B+ annually.
• New suits: This month Disney sued Visa and Mastercard, alleging they were essentially fixing fees — they settled privately. Walmart, Kroger, Amazon, and others have won billions doing the same.
• Scandals: Last week a judge greenlighted a suit against Visa for processing payments for Pornhub parent MindGeek (which is accused of enabling child sex abuse). The case could make payment juggernauts responsible for all transactions they process.

Land of the fee… home of the paid. US retailers pay 7X more in swipe fees than European retailers, which cap card fees. Most of that fee $$ goes to the bank that actually issued your card, because the bank is the one paying the merchant. But networks like Visa and Mastercard, which move your $5 latte payment from your bank to your coffee shop, are cashing in too:

• Booming profits: Visa’s and Mastercard’s profits surged last quarter, and Visa’s 66% profit margin is the S&P 500’s highest.
• Soaring IOUs: Credit-card balances spiked 13% last quarter, the biggest jump in 20+ years, as savings dwindled and inflation sizzled.

Ready, player none… The pandemic gaming boom is over. Global video-game sales are expected to fall this year for the first time in seven years. Last week, gaming titan Activision Blizzard (“Call of Duty,” “Overwatch”) said its quarterly revenue was $600M lower than a year ago. Nintendo’s Switch sales plunged 60%, Microsoft reported lower gaming revenue as Xbox sales slipped, and FIFA legend EA lowered its sales forecast. Up next to report: Roblox. Supply woes, recession jitters, and IRL fun are expected to shrink gaming sales by 9% this year.

BTS is back... we're not talking K-pop. This year’s back-to-school season will be pricey: families with kids in elementary through high school plan to spend, on average, $864 on supplies, up $168 from 2019. Retailers including Walmart and Target have cut their sales outlooks as households prioritize essentials like groceries and Ticonderoga pencils over new laptops. Still, overall BTS spend is on pace to match last year's $37B record. Some parents are dipping into savings to afford supplies. Now, some states are offering sales-tax holidays for BTS shopping.

Love at first swipe… for Bumble investors. The dating (and networking) biz, where women make the first move, saw a 24% revenue bump last quarter as its 3M+ paying users spent more $$ on app perks. Now Bumble’s targeting Gen Z with cheaper subscriptions and more digi-gift offerings (think: $5 virtual bouquet). Still, global dating-app downloads have dipped as people pick IRL meetups over speed-swiping. Tinder owner Match saw its shares plunge last week after reporting slowing growth. We’ll see whether Bumble felt the same heat when it reports Wednesday.

Taking home the mini shampoo… Don’t forget free cotton swabs. Hotel staple Hyatt reports tomorrow amid the travel rebound. The leisure + hospitality sector led July job gains as restaurants and hotels scrambled to hire (they’re still 1.2M positions short of prepandemic levels). Hospitality stocks have gained over the past month after strong earnings from Hilton and Marriott, whose revenue per available room surged 70% year over year. Airbnb had its best quarter ever with record bookings. We’ll see if Hyatt swung back to a profit.

• Batted: After spending $90M on “Batgirl,” Warner Discovery is scrapping the DC flick (which it had planned to release directly to HBO Max). Warner’s new execs are shifting focus back to box-office hits as losses mount.
• Taipei: House Speaker Nancy Pelosi became the highest-ranking US official to visit Taiwan in 25 years. Last week’s historic visit drew China’s wrath and rattled global markets.
• Bubbly: Pepsi invested $550M in “healthy” energy-drink maker Celsius. As soda declines, big bev companies have shifted to functional beverages (think: vitamin-packed energy drinks and enhanced waters).

• Friend: A study analyzing 21B Facebook friendships found that low-income kids with wealthier friends earn more as adults. Researchers say cross-class friendships help economic mobility more than school quality.
• Jackpot: The US got lotto fever last month when the Mega Millions jackpot hit $1.3B, but the frothy payout might not have been the only driver: high ticket sales can be a sign of economic desperation.
• OOTD: TikTok is becoming outfit Tok. Insta attracts 3X more influencer-marketing spend from brands, but the Tok’s surpassed FB as a fashion-marketing go-to — and is on track to steal YouTube’s second-place spot.

• Monday: Earnings expected from Tyson, GoodRx Holdings, and 23andMe
• Tuesday: Earnings expected from Marriott, Planet Fitness, Lemonade, Coinbase, Hyatt, and IAC
• Wednesday: July inflation numbers released. Earnings expected from Roblox, Disney, Nio, Bumble, and Wendy's
• Thursday: Jobless claims. Earnings expected from Baidu, Canada Goose, Rivian, Toast, Celsius Holdings, and Warby Parker
• Friday: Earnings expected from Spectrum Brands

Authors of this Snacks own: shares of Bumble, Amazon, Walmart, Disney, Microsoft, IAC, Baidu, Warner Bros. Discovery, and Match

ID: 2341237