International Growth Propel Visa’s Earnings By 40%

The old Visa logo (top) and the new logo (bottom) which was recently adapted.

Any company related to the financial industry has gotten quite a bit of negative press as of lately. However, for Visa, times are good.  According to their most recent quarterly report (July 2009) earnings are up 40% when compared to the same quarter one year ago. How is this company growing while the rest of the sector is struggling?

Well, for starters, Visa does not make loans. They simply process payments. That means they are making money whether or not a customer pays their credit card bill. Today, just under half of all purchases in the United States are made using electronic payment methods, such as Visa cards. That amount is expected to continue growing by around two percent… nothing to sneeze at, but it’s far from being high growth. But the story is different overseas in developing countries where card payments are just beginning to catch on. The other major player that follows this “no-risk” business model is MasterCard.  Discover and American Express are a hybrid – they make money by being a processing network, but since they also lend the money, they do take on risk.

The origins of Visa are actually quite fascinating. Check out the Visa company history and how they got started.

Written July 2009

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Yeah they’re making money because of all the FEES they charge us

Darrel Steiner

And MasterCard 🙂

Darrel Steiner

Well I guess I know what stock I’m buying next!