Visa (NYSE: V) is the largest payment card association in the U.S. and is responsible for managing an interconnecting network between Visa branded card issuing financial institutions and Visa payment card accepting retailers. Early on in the development of credit and debit cards the company established a nationwide, standardized, communication and security protocol for all connected parties which eventually led to the widespread, branded payment card issuance by banks, adoption by consumers, and acceptance by retailers. However, some may be surprised to learn Visa’s customers are actually the banks which issue their cards, not the consumer who uses them. The company generates revenue from recurring service fees at those banks and transaction fees at the point of sale (retailer nets against ticket price). Today, Visa is an enormous global enterprise, which processes over $11.6 trillion in annual payment card transaction value, and of that, $5.7 trillion in the U.S. Domestically the company oversees 90.5 billion transactions every year, or 1,200 transactions per second, everyday from their 50% market share of all credit and debit cards in circulation (over one billion in total). The remainder of the U.S. payment card market is split between MasterCard, American Express and Discover. Visa is to payment cards as Microsoft is to computer operating systems – if investors are interested in understanding the payments landscape, this is an important company know.
