Author - Admin | Reading Time - 05 Min | Date - 10/04/2023
One of the most well-known names in digital payments, Visa Inc. serves individuals, businesses, financial institutions, and governments in more than 200 nations and territories.
For financial institutions and merchants, the organization offers a wide range of services, including authorization, clearing, and settlement services.
Visa also offers credit, debit, and prepaid card services to customers in both the consumer and commercial markets, even though the company does not issue credit or debit cards. The companies that issue the real cards are Visa's customers.
Visa makes its profits by selling services as a middleman between financial institutions and merchants.
The company does not profit from the interest charged on Visa-branded card payments and also there is also same fake credit card number that is useful for testing.
which instead goes to the card-issuing financial institution. Visa so dominates the market that it has only a handful of big rivals, including Mastercard Inc. and American Express Co. (AXP), as well as digital payments companies like PayPal Holdings Inc.
KEY TAKEAWAYS
Visa is a digital payments company providing transactions between consumers, merchants, and banks and other financial institutions.
The company's data processing operations generate the largest portion of revenue.
Visa's strategy is to accelerate growth in consumer payments, new flows, and value-added services.
Visa recently completed its acquisition of European open banking platform Tink.
The company suspended all of its Russia operations in response to Russia's invasion of Ukraine.
Visa's Financials
Visa reported in late January financial results for Q1 of its 2022 fiscal year (FY), the three months ended Dec. 31, 2021.
The company reported a net income of $4.0 billion, up 26.6% compared to the year-ago quarter. Net revenue for the quarter rose 24.1% year over year (YOY) to $7.1 billion.
Net revenue from Visa's U.S. business, which comprises about 45% of total net revenue, rose 19.2% in Q1 FY 2022 compared to the year-ago quarter.
Net revenue from its international business grew 28.5% YOY and accounted for the other 55% of total net revenue in the company's fiscal first quarter.
Visa indicated in its earnings press release for Q1 FY 2022 that its results reflected the ongoing economic recovery from the initial shock triggered by the COVID-19 pandemic.
Strength in its network, growth in e-commerce, and better-than-expected progress in the resumption of cross-border travel.
The company said that it was confident that the recovery would continue despite rising cases of the coronavirus during the quarter.
Visa's Business Segments
Visa reports as a single segment, which is Payment Services.
But it routinely divides its revenue into four subsegments, which are the major generators of revenue for the company.
These segments are: Service Revenue, Data Processing Revenue, International Transaction Revenue, and Other Revenue.
Visa describes these subsegments as "components" of net revenue, but they are reported gross of client incentives.
The sum of the revenue totals for each segment amounted to gross revenue of about $9.4 billion in Q1 FY 2022. Visa's net revenue of $7.1 billion for the quarter is equal to that gross revenue figure minus client incentives.
Service Revenue
Visa's service subsegment consists of revenue from services provided to support client usage 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 Q1 FY 2022, Visa's service revenue was $3.2 billion, or about 34% of the company's total gross revenue. This is up 19.3% compared to the year-ago quarter.
Data Processing Revenue
Visa's data processing revenue includes revenue generated as a result of the company's clearing, settlement, authorization, value-added, network access, and other similar services.
In Q1 FY 2022, data processing revenue accounted for the largest portion of the company's gross revenue: $3.6 billion or about 38%. This figure is up 19.2% compared to Q1 FY 2021.
International Transaction Revenue
Visa is heavily involved in cross-border transaction processing and currency conversion, and these activities generate revenue in the subsegment of international transaction revenue.
In Q1 FY 2022, international transaction revenue was $2.2 billion, or about 23% of gross revenue. Revenue for this component was up 49.8% compared to the same quarter a year ago.