Visa Inc.V

Morningstar Rating

Stock Research and Analysis

by Michael Kon, CFA

Visa is a global card goliath that operates an open-loop card network and owns one of the most recognized and respected brands in the world. The firm's clients are thousands of financial institutions around the world that issue its cards. When a cardholder Read more

Bulls Say

Visa benefits from a change in the way consumers and businesses pay for their purchases. As long as consumers and businesses continue to pay more with cards and less with cash and checks, Visa will benefit.

Visa isn't exposed to credit risk because lending to cardholders isn't part of its business model. As a result, the deteriorating consumer credit environment has little effect on Visa.

Visa's network is hard to build or duplicate. The company connects thousands of financial institutions, and its network is used daily by millions of cardholders and merchants. This creates substantial barriers to entry for potential competitors.

Visa is a leading brand in the global payment industry; more than 60% of the outstanding cards in the world carry the Visa logo.

The settlement with American Express AXP, which was achieved shortly before the IPO, removes a substantial legal liability overhang for new shareholders. Read more

Bears Say

Visa is a constant target of regulators throughout the world, and attacks on the firm's business model are unlikely to stop.

The exclusion of Visa Europe from the IPO undermines the firm's ability to negotiate agreements with large global bank clients such as HSBC HBC.

American Express has been stealing share from Visa in its biggest market, the United States. We expect this to continue now that Amex is allowed to issue its cards through banks that were previously exclusive to MasterCard and Visa.

If the interchange fees charged to merchants decrease substantially, banks that issue Visa will probably put even greater pressure on the firm to reduce the amount of processing fees and assessments it charges, leading to lower revenue.

In many of its international markets, Visa benefits from only cross-border transactions, while intracountry transactions are processed through rival processing networks. As a result, Visa doesn't benefit from the bulk of the growth in foreign markets. Read more

Strategy

Visa's strategy is to reach agreements with financial institutions around the world to boost issuance of its cards and the acquisition of transaction with Visa-branded cards. The firm also tries to entice Read more

Management

We think management's performance clock began ticking after the IPO. The top brass have to prove to shareholders that they can work together, respond to Visa's challenges, and deliver the results expected from them as leaders of a public company. We Read more

Profile

Visa manages a group of global payment card brands, which it licenses to financial institutions that issue cards to their customers. The firm acts as the payment processor Read more

First Name

Last Name

Email Address

Zip Code

Create Password

Verify Password

(6-15 characters; case sensitive)

What is your occupation or job title?

Select...

Your registration indicates agreement to the terms of use.

A Supermajor Set Apart
Watch more