In an unprecedented move, one of the world’s largest credit card company is forgiving half of all debt as an act of kindness that will lure new and existing customers to their other financial products.
Visa CEO Charles W. Scharf told Bloomberg Business News, “We know the plan sounds crazy, but that’s only true in the short run. In the long run, we will add hundreds of millions more customers and with the ability to upsell more products, it will lead to much greater untapped revenue. And quite frankly, it’s the right thing to do.
“We feel sorry about the financial crisis that almost brought the country to economic collapse and our ‘forgiving’ policy will hopefully let the average person forgive us.”
The ‘Debt Forgiveness’ plan will roll out in late February, and all cardholders will receive more information in the mail.
An example of how the plan works is this: Customer 1 owes $10,000, after the forgiveness plan they owe $5,000 if the amount is paid off over the course of 18 months. The larger the amount, the longer the customer has to pay it off in full. Disclaimer, debt over $100,000 will only qualify for a 33% forgiveness rate and a shorter window to repay the debt.
“In theory, when people have less debt it gives them time to pursue other opportunities that will ultimately lead to more money for them and us. It’s a win-win. It might be the single most important program to lead to unheard prosperity and Visa will be leading the charge.
“We also believe it will drastically decrease the chance of another financial crisis, and in the event of one, we will have built up some goodwill which finance usually lacks. We have gouged and preyed on the stupid, so for once, it is the morally right thing to do.”
In the age of wealth inequality and massive credit debt, the forgiveness program seems unimaginable, but the company actually feels it will make much more money 10-15 years from now. The plan originated from a joint research project with economists from University of Chicago, Yale University, and the London School of Economics.
The program will roll out early summer in several yet to be determined countries but registration for the forgiveness program begins in April. The enrollment window will be ongoing for a period of time to allow the economist, accountants, and financial experts collect data on the progress of the experimental program. Visa is looking for 200,000 people to give the program a proper test. The debt must have been occurred in the past 5-15 years.
Visa will be announcing the sign-up date and more information later this week, so stay tuned.