Visa Investor Relations Material

Visa undeniably has one of the more attractive business models out there. You might think they issue cards and generate loans, but no, the company is facilitating transactions and is a royalty on consumer spending in a non-cash world. If you’re optimistic about the world and where it’s heading, Visa is undoubtedly a way to ride this trend, as cash still is used in many countries, and Visa's entrance into these markets will fuel their continued growth.

Visa is together with MasterCard, American Express, and Discover, the largest credit card network in the world.

Further reading: The Payment's Value Chain: A Complex Ecosystem

Visa has grown its revenue from 10.4 billion dollars in 2012 to 30.5 billion dollars in 2021, and EBITDA over the same period grew from 6.3 billion to 21 billion. This steadily increasing EBITDA margin, outpacing the revenue growth, is key, as more transactions pushed through Visa’s network mean higher incremental margins.

This asset-light business model enables the company to earn high margins, as stated, and also to invest in emerging technologies.

Their four-party payment system—VisaNet, facilitates transactions by authorizing, clearing, and settling them. The four parties involved in this system are:

• Account holders. The cardholder who uses the card for payment anywhere that it's acceptable.

• Issuers. Financial institutions are issuing Visa cards and products to account holders.

• Acquirers. Contracts with merchants to accept Visa products.

• Merchants. Retailers or billers accept Visa as an electronic payment method.

The shift from cash to cashless payments is in full motion. China and India, for example, more than 180 million people, respectively, made their first digital payments after the start of COVID-19. However, the trend is still in its infancy in most parts of the world, meaning significant growth opportunities lie ahead. 

Further reading: Visa and Mastercard: The Global Payment Duopoly