When MasterCard Inc, the world's No 2 credit-card association, announced this summer that it planned to go public, speculation quickly grew that arch-rival Visa, the world's No 1 card association, would quickly follow suit.
Visa, after all, faces the same legal pressure from merchants over fees as MasterCard - pressure that MasterCard admitted was a big factor in its decision to pursue an initial public offering.
What's more, the IPO promised to provide MasterCard with a currency for acquisitions, an advantage analysts said Visa would be well-advised to match.
But in the intervening months, the conventional wisdom has shifted, in part because Visa transferred control over so-called interchange rates - the transaction fees merchants pay the association that have generated so much controversy and litigation - to outside directors, including, potentially, merchants.
"It's a different approach," said Gwenn Bezard, research director at Aite Group, a Boston-based independent research firm that focuses on the financial services industry, of Visa's move. "But it has the same effect," blunting merchant criticism that the association is a cartel of competing banks colluding to fix prices.
WATCHING AND WAITING:
As a result, many analysts now think Visa can continue to be a private association for the foreseeable future, biding its time as MasterCard, whose members approved its IPO plan two weeks ago, blazes the trail.
"Visa has the luxury of saying 'Let's see what MasterCard does,'" says David Robertson, the Carpinteria, California-based publisher of the Nilson Report, an industry-tracking newsletter.
"If MasterCard becomes a more formidable competitor and starts to make money for its shareholders in a way that's impressive, then Visa can act. But in the meantime, it can wait and watch, he said."
A spokesman for Visa will only say the company hasn't taken any options off the table.
"We think the changes that we are implementing now are the right ones for us at this time," says Paul Cohen, vice president of corporate relations at Visa USA.
"But we're continuing to review our operations, our structure and our governance and we'll make further changes as appropriate."
RIVALS, NOT TWINS:
Visa has the luxury of time because although MasterCard and Visa are arch-rivals, MasterCard is a distant second in virtually every market where the two compete.
MasterCard makes money - because it has publicly traded debt, it has been reporting its financials for years - but it hasn't been gaining market share, Robertson said.
"Visa ain't broke," he said. "It's got dominant market share in every world region. It does not have to go to Wall Street to get funding to grow. MasterCard, on the other hand, has to create a new model. It has to figure out a way to reinvent its raison d'etre. And I think that's what this IPO is about."
Still, some analysts continue to think MasterCard's IPO will force Visa to act.
Dan Schatt, a senior analyst at Celent, a Boston-based financial research and consulting company, believes the IPO proceeds will give MasterCard the cash to build on its lead in online bill payment, where MasterCard's Remote Payment and Presentment Services already controls the lion's share of the fast-growing market.
"The announcement Visa has made (about its board) gives them more options in terms of potentially not going IPO," Schatt said. "But the one thing they're going to go up against is that MasterCard is going to have a war chest that they can use to leverage and promote their network."
MORE DIFFERENCES:
But even if Visa followed MasterCard's lead, it is unlikely it would look anything like MasterCard's IPO.
Unlike MasterCard, which is a single entity world-wide, Visa is a multi-pronged corporation with at least four separate regionally focused corporations and three more unincorporated units serving Asia, Latin America, and Central Europe, the Middle East and Africa. If it went public, it's not clear what exactly would be sold to investors.