You may have already noticed, that on the banking market, there are only a few big names in the sector of payment methods such as credit cards. Among those large companies which generate of course extremely high turnovers, there is the company Visa, whose securities are listed on the stock market. Here is therefore some information about its activities, but also some recommendations to help you carry out an objective and concrete analysis of its value in order to set up your investment strategies.
In terms of opportunities, we can point out in particular, those offered by emerging markets. The latter which are not yet fully equipped, represent in fact a very lucrative market for Visa and its direct competitors. The group’s ability to position on these markets is therefore an important issue in the years to come. You should monitor any eventual contracts and news related to these emerging countries.
The strong rise in the use of credit cards to the detriment of other means of payment such as checks, or cash is also a promising phenomenon for Visa, which must seize this opportunity to further develop its clientele.
The use of credit cards has also been boosted by the strong development of online commerce and of internet in general. Thanks to a high level of security, Visa is particularly well positioned on this since you can do secure online transactions with its credit cards. Visa is also surfing the waves of a new fashion, a new advanced payment method which is the payment through smartphones.
Finally, since the Basel III (Third Basel Accord), Visa is considered as a bank player but is not influenced by the current regulatory framework in this sector which protects it from certain risks.
Visa products and services are also threatened since some years by a new form of competition. It is of course, electronic payments methods, which are currently in full bloom. These include digital wallets such as PayPal which is also one of Visa’s customers, but also new methods such as dematerialized currencies like the Bitcoin and the other developing electronic currencies on the online market.
A good understanding of the Visa group and, more importantly, its business is of course essential if you are to be able to anticipate future changes in its value. This will help you to understand the challenges and opportunities that may arise in the years to come.
The Visa Group is an American company that specialises in the payment solutions sector. Specifically, Visa is in the business of issuing and marketing payment cards.
In order to better understand the group's activities, they can be divided into two main business areas:
Although based in the United States, Visa currently generates the majority of its revenue, i.e. 53.7% of its turnover, internationally.
According to its annual fiscal report filed with the SEC in Washington, D.C., the company has more than 3.4 billion payment cards in circulation today and these cards are accepted by more than 61 million merchants worldwide.
The cards marketed by Visa are distinguished from those of its competitors by the fact that they all begin with the number 4. The number on these cards consists of 16 digits.
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Let's now take a closer look at Visa's direct competition with a quick but comprehensive overview of its main rivals in the payment card business.
Of course, the NYSE-listed Mastercard Group is Visa's main competitor. It is an American payment and withdrawal systems company that was, until 2006, a cooperative owned by over 25,000 financial institutions. It is now a publicly traded company. The group offers credit and debit cards under the Mastercard, Maestro and Cirrus brands. They are accepted in more than 33 million shops worldwide and the group is one of the leaders in this sector.
Another major competitor to Visa is the American Express Group which is a US-based payment company known for its payment cards and travellers cheques. It is the fifth largest network in the world in terms of number of cardholders and merchants accepting its cards. When it was founded in 1841, it was a cash-in-transit company that nine years later took on its current name of American Express.
This other company that was founded as Diners Club is a credit card company that was founded in 1950. It was the first independent credit card company in the world and created the concept of a stand-alone company that produces credit cards for commerce and payments for travel and leisure activities. Diners Club International and its franchisees currently serve no less than 60 countries worldwide.
Let's take a look at some examples of Visa's recent partnerships with other companies.
In 2020, Visa signed a strategic agreement with the Accor Group to open up new payment options for members of the ALL-Accor Live Limitless loyalty programme. This partnership will combine Accor's loyalty programme with Visa's payment facilities to create a new card, ALL Visa. Members who apply will then be able to use it for everyday purchases wherever the card is accepted. Accor has also worked with Visa's partner financial and banking institutions in key markets in Europe, North and South America, the Middle East and Asia Pacific to issue the card.
Another partnership has also been established in 2021 with Crypto.com, a Hong Kong-based cryptocurrency platform, to launch a Crypto.com card internationally. This card will allow for bitcoin and other cryptocurrency trust loans, 8% cash back on purchases, a discount on Spotify, Netflix or Amazon and no fees.
Taking a position on the long term and when it is going upwards on the value of visa shares with CDFs or the integration of some of its shares in your stock portfolio requires the possibility that this title is likely to earn points in the months and years to come. But for that, you must of course be aware about the advantages of this asset for investors and the strengths of this company. This is what we propose you to find out here more in detail thanks to some information about the advantages of Visa.
One of Visa’s greatest strengths is of course its very strong popularity in the whole world. In fact, when we think about credit cards, the three big names that automatically come to mind are Visa, Mastercard and American Express and not the names of the banks that provides the credit card. This notoriety is in fact a pledge of trust by users and future clients.
Visa also has a very interesting positioning on the market of credit cards with extremely low competition. In fact, the current situation is that of a duopoly and two main players in this market remains Visa and Mastercard which are the only ones targeting the mass market at the moment. The operation of their branch of credit cards makes them particularly attractive to customers who carry out small repetitive transactions. One might think that the group American Express is also a direct competitor of Visa but in reality, Visa’s positioning is much more selective and sharp than that of the other two groups. Visa targets the mass market with a very large volume of transactions every second, which offers potential recurring and repetitive sales potential which is the major strength of this company. The use of a credit card on a daily basis has in fact become a real reflex for consumers.
On the other hand, Visa focuses its activities first of all on debit cards rather than on credit cards. The group has thus successfully reduced the risk connected to credit cards.
We should also mention, the quality and selective acquisitions made by Visa which perfectly keep up with its core activities. This avoids a certain dispersion that could be perceive as dangerous or risky.
Finally, one of the main qualities of Visa concerns the quality of its marketing relations and communication with the general public. We notice in particular the efforts made in the sponsoring of big sportive events such as the Olympic Games which allowed it to reach a very large audience despite an important investment. Thus, Visa has succeeded in increasing the power of its brand and its notoriety this way it can face its competence more serenely.
In order to carry out a precise analysis of the possibilities of expansion of Visa it is of course recommended to learn about the advantages of this company, but also about its disadvantages. Some weak points in fact could limit its potential to continue developing and make the price of its shares fall on the long term. Here is therefore a summary of the disadvantages of this asset and of this company.
Among the biggest negative points of Visa, we can mention particularly the option established by Visa Europe which was the possibility of asking Visa Inc to redeem its shares. Such a request will of course have very important consequences on the group’s finances with a very large and rapid outflow of funds.
It should also be pointed out that even if the company targets a mass clientele, we regret its limited choice of high end cards on the market where its competitor American Express is particularly well positioned. This specificity could thus influence the group’s results on the long term and slow down its development on certain segments of the population.
Finally, Visa is, like all the other company in this sector of activity, highly exposed to the world of finance and the risks of the banking sector which we know is not very stable in recent years.
If you would like to know the latest financial publications of the Visa Group, you can consult them freely and free of charge on the company's website, in the section reserved for investors. For the financial year 2019, the company's turnover was USD 22,977 million and its net income USD 12,080 million. The group's current market capitalization is USD 404,885 million.
It is interesting to know how the capital of the Visa company is distributed among the various private shareholders. The Vanguard group holds 8.49%, Fidelity Management & Research 5.07%, T Rowe Price Associates IM 4.67%, SSgA Funds Management 4.52%, BlackRock Fund Advisors 2.57%, Massachussetts Financial Services 1.57%, Capital Research & Management WI 1.56%, Geode Capital Management 1.55%, Capital Research & Management 1.24% and Northern Trust Investments IM 1.21%.
In order to trade the Visa share in the most efficient way possible, you must first of all carry out a good fundamental analysis of this value, but also a technical analysis which will help you to validate or invalidate the signals obtained and to know whether or not the market has already anticipated the effects of the news.
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