Visa is the largest global electronic payment solutions company in the world and provides its clients authorizing, clearing and settling of transactions, and other support services.
It operates as an open-loop payments network, where it does not act as an Issuer (financial institutions that issue credit/debit card to customers) or an Acquirer (financial institutions that acquire merchants to increase credit/debit card acceptability).
Visa only acts as a payment processing platform with four global processing centers located in the United States, Singapore, and the United Kingdom.
What Are The Alternatives?
Open-Loop Payment Processing Industry: Visa is the global leader in payment processing with nearly $8.5 trillion of payments volume processed on its network in 2019. Mastercard is the direct competitor to Visa and processed nearly $4 trillion of payments volume in 2018.
Closed-Loop Payment Processing Industry: American Express and Discover are alternatives to Visa but, operate a closed-loop payment network (The company acts as an issuer and acquirer). In 2018, payments volume of American Express and Discover were around $1.2 trillion and $376 billion, respectively.
What Is The Basis of Competition?
Competition is based on network’s acceptance, availability, service quality, and cost.
Has 4 Revenue Components-
1. Service Revenues: These are services provided in support of client usage of Visa products. The charges are recognized a function of payments volume (dollar volume of activity on Visa Network) generated by the client.
2. Data Processing Revenues: Transaction processing services involve routing of payment information and related data to facilitate authorization, clearing, and settlement of transactions on Visa network. We also recognize these services as a function of payments volume.
3. International Transaction Revenues: There are earned on cross-border transaction processing and currency conversion services by Visa.
4. Other Revenues: These consist of license fees, account holder fees, optional services, and product enhancement charges.
Net Revenues also include Client Incentives, which are are rebates offered to financial institutions for entering into a long-term contract with Visa to enhance the acceptance of Visa products.