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VISA CORPORATION

History

Visa Inc. ("Visa" or the "Company") is a payments technology company that unites consumers,

banks and governments in countries that exceed 200 around the globe. This enables them to use

digital currency instead of cash and checks. This company works effectively by managing and

promoting a portfolio of globally accepted payment brands like Visa, Interlink, Visa Electron

and PLUS. This achieved by licensing our clients to use this payment brands in their payment

programs. This shows that this company has a range of branded payments product policy that

clients can use in a financial institution. This enables them to offer credit, debit and cash access

programs for individuals and government entities that are their main customers. Visa does not

issue cards to the customers. They instead extend their credit rates through transaction processing

and value-added services like Visa Net, Visa Processing services and Visa Debit services. Hence,

all issues that regard cardholder and merchant relationships dealt with by our proper network of

financial institution clients. In addition, this company derives revenues from fees paid by our

customers when they make voluminous transactions and payments in the services that we offer.

The revenues can also be derived from related services such as Initial public offer (IPO) offered

in the stock exchange. This is evident from the announcement that Visa Inc Company made on
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February 25, 2008 of giving the public an IPO. This company offered an IPO to the public on

March 18, 2008 through offering half of its shares to the public. Visa sold 406 million shares to

the public priced at US$44 per share. The prices were $2 above the high end of the expected

$37–42 pricing range. That is why we managed to raise US$17.9 billion making the IPO be

listed among the largest initial public offering in U.S. history (Schinkel and Peter, 34).

Competition

Visa International’s main competitors are MasterCard American express and Discover. These

competitors came to the market to counter the monopoly that Visa was enjoying around the

business world. Therefore, the competitive advantage that Visa has over the other companies is

brand recognition (Wonglimpiyarat, 85).

Brand Recognition

Visa enjoys the most definitive competitive advantages possible over MasterCard. Visa

International is globally accepted rather than MasterCard that is still striving hard to be accepted

around the globe. That is why it’s believed to be a long-time sponsor of Olympic Games that

take place around the globe.

Switching Cost

Visa Inc. Company holds a strong business that has high switching costs. This implies that it

is costly to change brands. For instance, it would be difficult for someone to switch from using a

cable TV to a satellite TV because of the expenses of changing switch box installation that come

with the switching. That is the same thing that applies to banks that use Visa. The banks incur
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difficulties in switching card brands because of the expenses behind the switching process.

Moreover, Visa Company has economies of scale that makes it the largest brand name of credit

cards with Visa Net as their huge system. This gives Visa a strong competitive advantage, since

it has high switching costs.

Business model

Visa has a technology Competitive advantage since it operates Visa Net. This system is the

largest retail electronic payments processing network in the world. The company handles an

average of 130 million transactions on a daily basis. This implies that Visa accounts to more than

$5.4 trillion in global consumer spend is transacted on its branded payment products annually.

These products are as a result of a strong set of processing services that are powered by Visa Net.

These services are more important in business since they are core transaction processing, risk

management and information-based services.

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Works cited

Schinkel and Pieter, M. Market Oversight Games. Amsterdam: Amsterdam University Press.

2011. Print.

Wonglimpiyarat, J. Strategies of Competition in the Bank Card Business: Innovation

Management in a Complex Economic Environment. USA: Sussex Academic Press. 2005.

Print.