Visa to Work Well in Canadian ATMs - Analyst Blog

By Zacks | June 28, 2012 AAA

In an effort to provide its cardholders the convenience of secure and fast access to funds during their travel to Canada, Visa Canada, a division of Visa, Inc. V), entered into a strategic alliance with DirectCash, a provider of white label ATMs in Canada. The services will be effective this year onwards. The aim of the alliance is to make ATM transactions more accessible to visitors travelling to Canada, as according to a research conducted, travelers depend on ATMs to obtain local currency primarily because it allows them to do away with the hassles of carrying large amount of cash.

Sealing the deal between the companies, DirectCash will accept all types of cards that come under the purview of the Visa brand through 7,600 operating of its ATMs that are situated at prime locations for the convenience of travellers. It is expected that this alliance will prove to be beneficial for both the companies given Visa's wide market presence and DirectCash's expansive ATM network.

We believe that since its inception, Visa has been growing strongly through a healthy array of products and a huge network expanse. The company remains focused on the needs of its customers and continues to add value amid a challenging economic environment through its products that are user-friendly and flexible.

Moreover, the cross-border transactions are gaining traction in the non-U.S. regions, given the increased cross-border travelling and spending on Visa-branded products that are further aided by favorable geopolitical, economic and other circumstances. Consequently, travel-spend from countries like Canada have witnessed a substantial surge in the past year, thereby enhancing operating leverage. Hence, going forward, Visa strives to realign itself to enhance its competitive position and capitalize on the most promising growth opportunities from the standpoint of both a geographic and product development.

We retain our long-term Neutral recommendation on Visa. The company currently retains a Zacks #2 Rank, which translates into a short-term Buy rating. Its closest competitor MasterCard Inc. (MA) is equally proactive on the growth front both organically and inorganically. Within the same time frame, MasterCard too has made some significant acquisitions and product diversifications to maintain its competitive edge in the industry. It currently retains a Zacks #3 Rank, which translates into a short-term Hold rating.

 
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