VISA INC. [NYSE: V] | [$210.5]
Visa is a global leader in digital payments, providing solutions for consumers,
merchants, financial institutions, and governments in more than 200 countries
It operates one of the world's most advanced processing networks, VisaNet,
that can handle over 65,000 transaction messages per second.
Visa's business segments can be divided into: o Service Revenues (around
33%) o Data Processing Revenues (around 35%) o International Transaction
Revenues (around 28%) o Other (around 4%)
Visa's primary customers include a vast number of credit card issuing banks
Industry Overview and Competitive Positioning: [Digital Payment Industry]
The global digital payment market was valued at approximately $5.44 trillion
in 2020 and is expected to grow at around 20% CAGR until 2023.
The rise in the digital economy, the growth of e-commerce, and technological
advancements have contributed to the digital payment's growth.
o Visa: Approx. 50% market share globally in terms of card purchase volume.
o Mastercard (MA): 30% market share globally.
o American Express (AXP) and Discover (DFS) occupy smaller market shares.
o High barriers to entry due to: (1) Network Effect (2) Strong Brand Recognition (3)
Compliance and Security Standards.
Rationale (focus on the fundamentals and make it explicit):
o Thesis 1: Network Moat and Strong Brand Recognition
▪ Visa's vast network of merchants and consumers and its brand
recognition have made it a go-to choice for card payment solutions
▪ In comparison to competitors:
• Mastercard's market presence is slightly lesser, especially in certain emerging
• American Express caters more to the premium segment and has limited reach in
terms of merchant acceptance.