Data processing, service and international transactions


Visa Inc. (V) is one of the dominant digital payments brands in the world, providing services in more than 200 countries and territories to individual consumers, merchants, financial institutions and governments. The company provides a wide range of services, including authorization, clearing and settlement services to financial institutions and merchants. Additionally, although Visa does not issue credit or debit cards, the company provides credit, debit, and prepaid card services to consumers and businesses.The real cards are issued by Visa customers.??

Visa makes its profits by selling services as an intermediary between financial institutions and merchants. The business does not benefit from the interest charged on Visa card payments, which instead goes to the financial institution that issued the card.Visa is so dominant in the market that it has only a handful of big rivals, including Mastercard Inc. (MA), as well as digital payment companies like PayPal Holdings Inc. (PYPL).

Key points to remember

  • Visa is a digital payment company that conducts transactions between financial institutions, consumers, merchants, and banks.
  • The company’s data processing operations generate most of the revenue.
  • Visa’s strategy is to aggressively expand its presence in contactless payments, e-commerce and other digital vehicles.
  • Visa recently terminated its merger agreement with Plaid Inc. following an antitrust lawsuit filed by the DOJ regarding the proposed transaction.
  • Visa acquired financial technology company YellowPepper in November 2020.

Visa finances

Visa reported net income of $ 3.1 billion on $ 5.7 billion in net sales in the first quarter of its fiscal 2021 (fiscal year), which ended December 31, 2020. Net income decreased by 4.5% while the net turnover decreased by 6.1% compared to the previous year. trimester. Visa noted that its revenues have started to show signs of recovery after being negatively impacted in 2020 by the COVID-19 pandemic. However, the pandemic continues to cause considerable uncertainty.

Net revenue from Visa’s US operations, which represents approximately 47% of total net revenue, declined 1.8% in the first quarter of fiscal 2021 compared to the quarter of fiscal year 2021. last year. Net income from international sources, which accounts for the remaining 53% of total net income, fell 9.5%. Visa said the revenue declines were due to year-over-year (YOY) changes in cross-border volume, which was affected by COVID-19, and higher incentives for customers. The decline in net income was, however, partially offset by the growth in nominal volume of payments and transactions processed.

Visa business sectors

Visa reports as one segment, which is payment services. But he regularly divides his income into four sub-segments, which are the main revenue generators of the business. These segments are: service revenue, data processing revenue, international transaction revenue and other revenue.Visa describes these sub-segments as “components” of net income, but they are reported gross of customer incentives. The sum of the total revenue of each segment equals gross revenue of approximately $ 7.5 billion in the first quarter of fiscal 2021. Visa’s net revenue of $ 5.7 billion for the quarter is equal to this gross revenue figure minus customer incentives.

Service revenues

The Visa Services sub-segment consists of revenue from services provided to support customer use of Visa’s payment services. This is separate from the authorization, clearing and settlement related to the company’s payment services, which are included elsewhere. In the first quarter of fiscal 2021, Visa’s services revenue was $ 2.7 billion, or about 35% of the company’s total gross revenue. This is an increase of 4.8% from the quarter of the previous year.

Data processing revenue

Visa’s data processing revenue includes all revenue generated from clearing, settlement, authorization, value added, network access and other similar services. In the first quarter of fiscal 2021, data processing revenues made up the largest portion of the company’s gross revenue: $ 3.0 billion, or about 40%. This figure is up 5.9% compared to the first quarter of fiscal 2020.

Income from international transactions

Visa is heavily involved in the processing of cross-border transactions and currency conversion, and these activities generate revenue in the International Transactions revenue sub-segment.?? In the first quarter of fiscal 2021, revenue from international transactions was $ 1.5 billion, or about 19% of gross revenue. Revenue for this component was down 28.1% compared to the same quarter a year ago.??

Other income

Visa also earns revenue from licensing fees, value-added services, account holder services, etc. These sources are grouped under Other.?? At $ 384 million or 5% of Visa’s gross revenue in the first quarter of fiscal 2021, the Other component accounts for the smallest portion of revenue. Other income increased 5.2% from the previous year quarter.

Recent developments in Visa

On November 20, 2020, Visa announced the completion of its acquisition of YellowPepper, a fintech company that supports leading financial institutions and startups in Latin America and the Caribbean. This is the first acquisition of this type of Visa in the region and will help accelerate the company’s “network of networks” strategy. Visa said it will now be able to offer a single point of access to initiate different types of transactions and enable the secure transfer of money.

On November 5, 2020, the US Department of Justice (DOJ) filed an antitrust complaint to block Visa’s planned acquisition of Plaid Inc., another fintech company. The deal is valued at $ 5.3 billion and the DOJ alleges the deal would remove a significant competitive threat to Visa in the online debit market. Visa issued a statement challenging the DOJ’s decision, saying it plans to vigorously defend the transaction. On January 12, 2021, Visa issued a press release announcing that it and Plaid had terminated their merger agreement. Visa has also agreed with the DOJ to dismiss the litigation related to the proposed transaction.

How Visa captures diversity and inclusiveness

As part of our efforts to raise awareness of the importance of diversity in businesses, we provide investors with insight into Visa’s transparency and its commitment to diversity, inclusion and social responsibility. We’ve looked at data released by Visa to show you how it accounts for the diversity of its board of directors and workforce to help readers make informed buying and investing decisions. .

Below is a table of potential diversity metrics. It shows whether Visa is disclosing its data on the diversity of its board of directors, C-Suite, senior management and general employees, as indicated by a ✔. It also shows whether Visa breaks down those reports to reveal its diversity by race, gender, ability, veteran status, and LGBTQ + identity.

Visa Diversity and Inclusiveness Reports
Race Kind Capacity Veteran Status Sexual orientation
Board of directors
Suite C
Executive management ✔ (US only) ??
Employees ✔ (US only) ??

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