How Visa Makes Money

Visa's data processing and services units generate the most revenue

Visa Inc. (V) is one of the dominant digital payments brands globally, providing services in more than 200 countries and territories to individual consumers, merchants, financial institutions, and governments. The company provides a broad range of services, which include authorization, clearing, and settlement services for financial institutions and merchants. Additionally, while Visa does not issue credit or debit cards, the company does provide credit, debit, and prepaid card services to consumers and businesses. Visa's clients are the ones that issue the actual cards.

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 institution. Visa so dominates the market that it has only a handful of big rivals, including Mastercard Inc. (MA) and American Express Co. (AXP), as well as digital payments companies like PayPal Holdings Inc. (PYPL).

Key Takeaways

  • Visa is a digital payments company providing transactions between consumers, merchants, and banks and other financial institutions.
  • The company's data processing operations generate the largest portion of revenue.
  • Visa's strategy is to accelerate growth in consumer payments, new flows, and value-added services.
  • Visa recently completed its acquisition of European open banking platform Tink.
  • The company suspended all of its Russia operations in response to Russia's invasion of Ukraine.

Visa's Financials

Visa reported in late January financial results for Q1 of its 2022 fiscal year (FY), the three-month period ended Dec. 31, 2021. The company reported a net income of $4.0 billion, up 26.6% compared to the year-ago quarter. Net revenue for the quarter rose 24.1% year over year (YOY) to $7.1 billion.

Net revenue from Visa's U.S. business, which comprises about 45% of total net revenue, rose 19.2% in Q1 FY 2022 compared to the year-ago quarter. Net revenue from its international business grew 28.5% YOY and accounted for the other 55% of total net revenue in the company's fiscal first quarter.

Visa indicated in its earnings press release for Q1 FY 2022 that its results reflected the ongoing economic recovery from the initial shock triggered by the COVID-19 pandemic as well as the strength in its own network, growth in e-commerce, and better-than-expected progress in the resumption of cross-border travel. The company said that it was confident that the recovery would continue despite rising cases of the coronavirus during the quarter.

Visa's Business Segments

Visa reports as a single segment, which is Payment Services. But it routinely divides its revenue into four subsegments, which are the major generators of revenue for the company. These segments are: Service Revenue, Data Processing Revenue, International Transaction Revenue, and Other Revenue. Visa describes these subsegments as "components" of net revenue, but they are reported gross of client incentives. The sum of the revenue totals for each segment amounted to gross revenue of about $9.4 billion in Q1 FY 2022. Visa's net revenue of $7.1 billion for the quarter is equal to that gross revenue figure minus client incentives.

Service Revenue

Visa's service subsegment consists of revenue from services provided to support client usage of Visa's payment services. This is separate from the authorization, clearing, and settlement related to the company's payment services, which are included elsewhere. In Q1 FY 2022, Visa's service revenue was $3.2 billion, or about 34% of the company's total gross revenue. This is up 19.3% compared to the year-ago quarter.

Data Processing Revenue

Visa's data processing revenue includes revenue generated as a result of the company's clearing, settlement, authorization, value-added, network access, and other similar services. In Q1 FY 2022, data processing revenue accounted for the largest portion of the company's gross revenue: $3.6 billion or about 38%. This figure is up 19.2% compared to Q1 FY 2021.

International Transaction Revenue

Visa is heavily involved in cross-border transaction processing and currency conversion, and these activities generate revenue in the subsegment of international transaction revenue. In Q1 FY 2022, international transaction revenue was $2.2 billion, or about 23% of gross revenue. Revenue for this component was up 49.8% compared to the same quarter a year ago.

Other Revenue

Visa also earns revenue from license fees, value-added services, account holder services, certification, and more. These sources are grouped together as Other. At $449 million or 5% of Visa's Q1 FY 2022 gross revenue, the Other component accounts for the smallest portion of revenue. Other revenue rose 16.9% compared to the year-ago quarter.

Visa's Recent Developments

On March 10, 2022, Visa announced that it has completed its acquisition of Tink, a Europe-based open banking platform that enables banks, financial technology companies (fintechs), and startups to develop data-driven financial services. Visa first announced its agreement to acquire Tink for 1.8 billion euros ($2.0 billion) in June 2021.

On March 5, 2022, Visa announced that it was suspending all of its operations in Russia in response to Russia's invasion of Ukraine. The company said that the suspension of operations in the country was effective immediately.

How Visa Reports Diversity and Inclusiveness

As part of our effort to improve the awareness of the importance of diversity in companies, we offer investors a glimpse into the transparency of Visa and its commitment to diversity, inclusiveness, and social responsibility. We examined the data Visa releases to show you how it reports the diversity of its board and workforce to help readers make educated purchasing and investing decisions.

Below is a table of potential diversity measurements. It shows whether Visa discloses its data about the diversity of its board of directors, C-Suite, general management, and employees overall, as is marked with a ✔. It also shows whether Visa breaks down those reports to reveal the diversity of itself by race, gender, ability, veteran status, and LGBTQ+ identity.

Visa Diversity & Inclusiveness Reporting
  Race Gender Ability Veteran Status Sexual Orientation
Board of Directors          
General Management ✔ (U.S. Only)      
Employees ✔ (U.S. Only)      
Article Sources
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  1. Visa Inc. "Form 10-K for the fiscal year ended September 30, 2021," Pages 4-5.

  2. Visa Inc. "Form 10-K for the fiscal year ended September 30, 2020," Page 7.

  3. Visa Inc. "Form 10-K for the fiscal year ended September 30, 2021," Page 5.

  4. Visa Inc. "Form 10-Q for the quarterly period ended December 31, 2021," Page 5.

  5. Visa Inc. "Form 10-Q for the quarterly period ended December 31, 2021," Page 28.

  6. Visa Inc. "Visa Inc. Reports Fiscal First Quarter 2022 Results," Page 1.

  7. Visa Inc. "Form 10-K for the fiscal year ended September 30, 2021," Page 6.

  8. Visa Inc. "Form 10-K for the fiscal year ended September 30, 2021," Page 64.

  9. Visa Inc. "Form 10-Q for the quarterly period ended December 31, 2021," Page 11.

  10. Visa Inc. "Visa Completes Acquisition of Tink."

  11. Inc. "1 EUR to USD - Convert Euros to US Dollars."

  12. Visa Inc. "Visa To Acquire European Open Banking Platform Tink."

  13. Visa Inc. "Visa Suspends All Russia Operations."

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