Visa Inc business model

Visa Inc is global payment technology company established in 1958 headquartered in California. It’s second largest payment network after China Union (protected by government of China). As per Forbes magazine without China UnionPay , Visa Inc is biggest worldwide.

In Match 2008 IPO (initial public offering) with 44 dollars per share. Traded in New York Stock Exchange under “V” code. In 2015 stock split 1:4 (meaning 1share before split = to 4 shares after split) attracted wider range of investors. Company’s auditor KPMG LLP (Klynveld Peat Marwick Goerdeler).

Visa’s Inc doesn’t issue credit/debit cards, doesn’t set cardholders fees or interest rates, doesn’t issue loans to cardholders. Technically it’s payment gateway where small charges applied on every card transaction after authorization approval. Transactions happen through Data processing centers located around the world. As more transactions as more revenue for company. Visa faces no default risk on credit card loans. Main revenue sources are: service revenue, data processing revenue, international transaction revenue.

Merchants in order to complete retail sale must have POS machines (point of sale). Installment of POS done by bank in which retailer owning account. This is crucial because debit/credit cards swiped in point POS and more swipes = more turnover to Visa. End customer does not pay any charges but merchant has to pay small percentage from every swipe.

Visa Inc creates value for merchants and banks because of created global processing infrastructure with comprehensive growth plan. Due to company’s website supporting global research in:

  1. Deep learning for commerce
  2. Scalable machine learning system
  3. Security analysis (cryptography, distributed and endpoint system security, data accusations and analysis)

Following are other payment technologies used by Visa :

  1. Apple pay (digital card number, could be used everywhere where Apple pay accepted, for security used fingerprint or passcode)
  2. Google pay (virtual account number which enable pay & receive services)
  3. Samsung pay (used encrypted token to keep card details safe for highest cyber security level)
  4. Chip card (chip card generates one time code for everyone retail swipe)
  5. mPOS (cost 1/3 traditional POS)
  6. Visa checkout (increase percentage of completed sales)
  7. Visa digital solutions
  8. Visa direct
  9. Visa ID intelligence (match ID photo to selfie for authentication, fingerprint or voice)
  10. Contactless for issuers (seamless customers experience with no PIN)
  11. Visa ready
  12. Visa token service (more ways to pay while protecting sensitive data).

World expansion brings more revenue but there one country where currently expansion almost impossible. Government of China protecting China Union Pay network and only in 2017 permitted for foreign companies apply for license. It’s going to be late to expand in China because of national policy of “Made in China” and strong people’s determination to support China Union Pay.

Increased regulation from governments impacting in positive way. With more strict regulation easily to track fraud transactions, black money movement, tax avoidance and many more. Payment networks provide convince for both sides and expected double digit growth every year.

Please follow my blog, in next article MasterCard business model.

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