Visa Inc. (V) is one of the most widely used and well-known digital payment companies, with service in more than 200 countries to consumers, merchants, governments, and major financial institutions. Visa offers authorization, clearing, and settlement services for merchants and institutions. A common misconception is that Visa issues credit cards. Instead, 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, which instead goes to the card-issuing financial institutions. While Visa does not issue credit or debit cards, the company does offer 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. In the decades since its founding, however, Visa has dramatically expanded its reach. For FY 2020, ended September 30, the company reported $10.9 billion in net income on net revenue of $21.8 billion, with total payments volume of $8.8 trillion globally. As of December 17, Visa has a market capitalization of $494.3 billion.
In recent years, the company has taken an active approach to growing organically and by acquisition, including by buying companies with advanced payment technologies. Several of Visa’s top acquisitions have allowed the company to enter new businesses, including fund transfers between bank accounts, and also mobile banking and payment integration. Other acquisitions have helped the company to consolidate or improve its existing businesses.
Below, we look in detail at 4 of Visa’s most important 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 in cash and stock (USD $23.4 billion)
- Date Purchased: Completed June 21, 2016
Prior to 2016, Visa’s business in Europe, including more than 500 million Visa-branded credit cards issued in the region, was controlled by Visa Europe. Visa Europe operated as a separate business and was owned and operated by member banks and other payments services companies. In September 2015, Visa announced plans to acquire Visa Europe to consolidate operations into a single global company. The transaction included an upfront consideration of €16.5 billion and a total transaction value of up to €21.2 billion based on an additional potential payment to be made after the fourth anniversary of the close of the deal. Besides consolidating Visa’s operations, the acquisition expanded its electronic payments volume across Europe. At the time of the acquisition, 37% of personal spending in the region took place via cash or check.
- Type of Business: Payment Services Technology
- Acquisition Price: Undisclosed
- Date Purchased: (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 for speedy resolution of these disputes, reducing costs and time for consumers and merchants. Visa purchased Verifi to integrate its technology into Visa’s existing risk management services. Chargebacks account for tens of billions of dollars in losses annually for payment providers and merchants. Visa expects the adoption of Verifi’s technologies to cut its own losses significantly.
- Type of Business: Automated Clearing House (ACH) Network
- Acquisition Price: $257 million
- Date Purchased: May 8, 2019
U.K.-based Earthport specializes in cross-border payment services and one of the world’s largest independent automated clearing house networks at the time of Visa’s acquisition in 2019. Before the acquisition, Visa enabled payments to be sent only to or from Visa cards. Buying Earthport made it possible for Visa’s clients to allow governments, businesses and individuals to use Visa to send or receive money through bank accounts worldwide. The deal will enable Visa to reach most of the world’s banking population and allow them to easily, quickly, and securely move money worldwide. Trillions of dollars is sent via a wire transfer or bank account globally.
- Type of Business: Payment Gateway Software
- Acquisition Price: Undisclosed
- Date Purchased: July 17, 2019
Payworks is a German company that develops cloud-based software to integrate payments for retailers into a single omnichannel offering. This enables a seamless shopping experience whether consumers are shopping online from a desktop, by telephone, on a mobile device, or visiting a physical store. Visa acquired Payworks in July of 2019 with the intention of integrating Payworks’ point of sale (POS) technology with its CyberSource payments management and fraud protection platform.