Visa Inc

Part l: A History of Visa

INTRODUCTION
Visa is one of the biggest companies in the world.  Cards bearing the Visa logo are used more than 340 million times every day. And the Visa brand is one of the most-recognized on the planet. Yet unlike other companies of similar size and ubiquity, few people know what Visa does, how they make money, or why they even exist.
To understand, it helps to look at the company’s history.

Part 1: http://minesafetydisclosures.com/blog/20...ry-of-visa
Part 2: https://minesafetydisclosures.com/blog/2...ew-of-visa

Visa to pay $5.3 billion to buy fintech startup Plaid

Reporting by David French and Krystal Hu in New York and Saumya Sibi Joseph and Ankit Ajmera in Bengaluru;
JANUARY 14, 2020 / 4:11 AM

(Reuters) - Visa Inc said on Monday it agreed to buy privately held software startup Plaid Inc in a $5.3 billion deal that will boost the payments giant’s access to the booming financial technology space.

The transaction highlights how traditional financial firms are willing to pay top dollar to acquire businesses which have established strong positions servicing the digital and cashless economy.

Plaid’s technology lets people link their bank accounts to mobile apps such as Venmo, Acorns and Chime, with the San Francisco-based firm saying its systems have been used by one in four people with a U.S. bank account.

The $5.3 billion price given in Monday’s statement is double what Plaid was reportedly valued at during its last fundraising, when it took a $250 million Series C round that was announced in December 2018.

It was later revealed by Plaid that both Visa and rival Mastercard Inc were investors in that round.

“Plaid is a leader in the fast growing fintech world,” Visa Chairman and CEO Al Kelly said in Monday’s statement.

“The acquisition, combined with our many fintech efforts already underway, will position Visa to deliver even more value for developers, financial institutions and consumers.”

Founded in 2013 and currently connecting with over 11,000 financial institutions across the United States, Canada and Europe, Plaid will be able to use the acquisition to leverage Visa’s global brand in expanding its own business, according to a source familiar with the matter.

Visa expects the deal to close in the next three to six months and benefit its adjusted earnings per share at the end of the third year.

More details in https://www.reuters.com/article/us-plaid...SKBN1ZC2BF

In the BT article published 8 Feb 2020 "Have multi-currency account, will travel?: How far will new multi-currency players go in the payments game?", I noticed that the new payment tech disruptors still needed Mastercard / Visa.

Hence, it seems like these players affect banks more than the likes of Mastercard, Visa, Amex, UnionPay, JCB. The latter group of payments technology companies seem like a "semi-monoply" and wld probably make excellent investments at the right price. I have always regretted my lack of knowledge in this field which led to my missing out on Visa IPO previously.

Amazon to stop accepting Visa credit cards issued in the UK, citing high fees
* Amazon has told some customers that, from Jan. 19 onward, the company will no longer accept Visa credit cards issued in Britain.
* The e-commerce giant cited high fees charged by the payment processor.
* Visa said it was “very disappointed that Amazon is threatening to restrict consumer choice in the future.”

Ryan Browne
PUBLISHED WED, NOV 17 20215:05 AM EST

LONDON — Amazon plans to stop accepting payments made via Visa credit cards issued in the U.K. starting next year.

The e-commerce giant has told some customers that, from Jan. 19 onward, the company will no longer accept Visa credit cards issued in Britain due to high fees charged by the payment processor.

Visa earlier this year hiked the interchange fees it charges merchants for processing digital transactions in the U.K., following the country’s exit from the European Union. The move followed a similar development from Mastercard, which also increased its fees.

Amazon customers were told they will still be able to use debit cards — including those issued by Visa — and non-Visa credit cards like Mastercard and American Express. Users are being encouraged to update their default payment method ahead of the changes. The news was first reported by Bloomberg.

Visa said it was “very disappointed that Amazon is threatening to restrict consumer choice in the future.”

“U.K. shoppers can use their Visa debit and credit cards at Amazon U.K. today and throughout the holiday season,” a Visa spokesperson told CNBC.

“We have a long-standing relationship with Amazon, and we continue to work toward a resolution, so our cardholders can use their preferred Visa credit cards at Amazon U.K. without Amazon-imposed restrictions come January 2022.”

More details in https://www.cnbc.com/2021/11/17/amazon-t...he-uk.html

In the beginning Visa and Mastercard were enablers; the payment infrastructure of the Big 2 enabled many new business models to be made possible over the internet (e-commerce, digital booking of air-tickets and hotels, digital distribution of software and games etc.). They provided more value than they extract from stakeholders.

However, as they saturate markets, they are now more like tollkeepers that levy additional costs on merchants and businesses; getting outsized returns at low marginal costs.

Many businesses and startups (crypto, Fintech, Big Tech, GovTech, digital wallets, E-commerce companies, BNPL, Web3.0 etc.) are eying the lucrative, high margin, trillion dollar payment market. Cost of building out payment infrastructure is lower than ever. The incumbents are under attack from every direction as businesses seeks to cut cost.

Not optimistic that Visa and Master (to a smaller extend, PayPal) is able to continue to outperform the market over the next 10 years.

2c. Peace. 

(Not vested)

It is amazing that Visa et al has defended their revenues so well with all the new comers into payments.

Will be good if there are more competition in this area, including in SG. The MDR/swipe fees are still a juicy 2-3% of transaction.

Hopefully, this will change in the coming years.

I think Visa and Mastercard's revenue can still grow over the next few years. Though probably to a lesser extend as it did before.

10 years out, I'm not confident if it can drive adequate return to beat the market, or meet my minimum hurdle rate of 15% annualized.

Just my 2c, I have been wrong many times, and I could be wrong again on this one.

(not vested)

A very good breakdown of BNPL (Buy now pay later) in recent years. IMO, a potential existential threat to Credit Cards if current trend persists.:

(20-11-2021, 02:29 AM)Wildreamz Wrote: A very good breakdown of BNPL (Buy now pay later) in recent years. IMO, a potential existential threat to Credit Cards if current trend persists.:

Afterpay from Oz and all the other BNPL providers are just online versions of an old idea of payment in installments, much like when you buy some expensive home stuff at COURTS and sign up for an installment plan. 

The credit card market is very big hence there is meat for these companys as some consumers dont wanna pay/no ability to pay with credit card, but still want to buy and pay later when their salary comes in. Theres also a lot of people who are sick with getting credit card debt with super high interest rates that never seem to be paid back.

Oz has a new company likely to IPO soon as well called BeforePay, which is where they forward your salary (max $1000 first to buy something in the fortnight before your pay comes (in oz salary is usually paid out every 2 weeks cycle) and charge like 5% fees, then you pay back with your salary over next few pay cycles. This will likely be popular for consumers who live paycheck to paycheck(quite common in some western nations like Oz) who want instant access to funds to buy something thats on sale or presents for upcoming birthday etc.. But it is still sort of an installment plan BNPL concept, not much difference to Afterpay. They will probably poach some customers from Afterpay.