Fundamental Analysis Visa Inc. V
The Company’s technology enables its customers to make digital payments. Visa operates worldwide with businesses, banks, and governments to use digital currency.
Visa, basically as a “middle man” between the customers and the banks, benefits tremendously from the fast-growing volume of electronic payments for online spending, thanks to the company’s dominant position in the business of electronic transaction.
Visa builds strategic partnerships with various companies, such as Apple, Google, and PayPal.
To enable customers to make payments online via any device, Visa launched Visa Checkout which used by Apple on its Apple Pay service.
With Visa Direct, the customers can transfer money from P2P, B2B, or P2B. Compared to wire transfer, Visa Direct has the advantage of more security, cost efficiency and speed of transaction. Visa Direct is very scalable service and would increase the profitability of the company through its growing user base.
Visa collaborates with China UnionPay on payment security, innovation, and financial inclusion.
Visa Advertising Solutions provides merchants analytics from the Visa network to help merchants better understand their customer demographics and purchasing decisions.
Visa has already dominant position in the market (62% market share in world wide electronic transaction volume) and the company strengthens its position by building the own ecosystem which contains Visa Checkout, Visa Ad Measurement, Visa Direct, and mVisa. The strong network effect of Visa’s services is not the only competitive advantage of the company, Visa’s growing data base about user’s personal data and engagement also widens the Company’s economic moat.
An other important advantage of the company is its trusted brand which is a necessary for online transactions and very costly to replicate.
Increasing regulation of the global payments industry can restrict the company’s revenue growth, increase the operating costs and cause legal disputes.
Governments in China and some other Asian countries, protect their own domestic payment card networks and brands.
(1) Very high gross profit margin indicates a very wide economic moat which will probably remain for a long time because of company’s innovative culture and dominance in international markets.
(2) The volume of online payments and cross border transactions is rising and Visa will be one of the main beneficiaries of this trends.
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