Visa Inc. (V) is one of the most widely used and well-known digital payment companies, with services in over 200 countries for consumers, merchants, governments and major financial institutions. Visa provides authorization, clearing and settlement services to merchants and institutions. A common misconception is that Visa issues credit cards. Instead, Visa makes its profit by selling services as an intermediary between financial institutions and merchants. The company does not profit from interest charged on Visa-branded card payments, which instead go to card-issuing financial institutions. Although Visa does not issue credit or debit cards, the company offers credit, debit and prepaid card services to consumers and businesses.
Visa was founded in 1958 and has retained its core business model of facilitating payments between consumers and businesses.However, in the decades since its inception, Visa has greatly expanded its reach. For fiscal 2020, ending September 30, the company reported net income of $10.9 billion on net revenue of $21.8 billion, with total payment volume of 8.8 trillions of dollars worldwide.As of December 17, Visa had a market capitalization of $494.3 billion.
In recent years, the company has taken an active approach to organic and acquisition growth, including acquiring companies with advanced payment technologies. Several of Visa’s major acquisitions have allowed the company to move into new businesses, including funds transfers between bank accounts, as well as mobile banking and payment integration. Other acquisitions helped the company consolidate or improve its existing operations.
Below, we take a detailed look at 4 of Visa’s most significant acquisitions. The company does not provide a breakdown of how much profit or revenue each acquisition currently contributes.
- Type of business: Payment services
- Acquisition price: up to 21.2 billion euros in cash and shares (23.4 billion US dollars)
- Purchase date: Completed June 21, 2016
Prior to 2016, Visa’s operations in Europe, including more than 500 million Visa-branded credit cards issued in the region, were controlled by Visa Europe. Visa Europe operated as a separate business and was owned and operated by member banks and other payment service companies. In September 2015, Visa announced its intention to acquire Visa Europe to consolidate its operations into one global company. The transaction included an initial consideration of €16.5 billion and a total transaction value of up to €21.2 billion based on a potential additional payment to be made after the fourth anniversary of the closing of the transaction.In addition to consolidating Visa’s operations, the acquisition expanded its volume of electronic payments across Europe. At the time of acquisition, 37% of personal spending in the area was in cash or by check.
- Business Type: Payment Services Technology
- Acquisition price: undisclosed
- Purchase Date: (Announced June 28, 2019) (Completed September 12, 2019)
Verifi is a payment services technology company that reduces chargebacks, which are charges returned to a credit card after a customer successfully disputes them. Verifi’s technology allows these disputes to be resolved quickly, reducing costs and time for consumers and merchants.Visa acquired Verifi to integrate its technology into Visa’s existing risk management services.Chargebacks represent tens of billions of dollars in annual losses for payment providers and merchants. Visa expects adoption of Verifi’s technologies to significantly reduce its own losses.
- Business Type: Automated Clearing House (ACH) Network
- Acquisition price: $257 million
- Purchase date: May 8, 2019
UK-based Earthport specializes in cross-border payment services and one of the world’s largest independent automated clearinghouse networks at the time of Visa’s acquisition in 2019. Prior to the acquisition, Visa allowed only send payments to or from Visa cards. The purchase of Earthport enabled Visa customers to enable governments, businesses and individuals to use Visa to send or receive money through bank accounts around the world. The agreement will allow Visa to reach the bulk of the global banking population and enable them to easily, quickly and securely transfer money around the world. Trillions of dollars are sent via wire transfer or bank account around the world.
- Business Type: Payment Gateway Software
- Acquisition price: undisclosed
- Purchase date: July 17, 2019
Payworks is a German company that develops cloud-based software to integrate retailer payments into a single omnichannel offering. This enables a seamless shopping experience whether consumers are shopping online from a desktop, over the phone, on a mobile device, or visiting a physical store. Visa acquired Payworks in July 2019 to integrate Payworks point-of-sale (POS) technology with its CyberSource payment management and fraud protection platform.