Visa Ventures Into Personal Payments
Visa (NYSE:V) has recently announced that it will venture into the personal payments market and offer the ability to transfer or receive funds directly to a Visa credit, debit or prepaid card accounts in the U.S. Visa is the largest global electronic payment solutions company in the world and has the largest network of credit and debit cards in circulation. The company makes money by providing transaction information and resources between the customer, merchant and their respective banks, collecting a fee based on the number and dollar value of transactions that it processes. Visa competes with other card networks like MasterCard (NYSE:MA), Discover (NYSE:DFS) and American Express (NYSE:AXP).
Our price estimate for Visa stands at $85.03, which is about 19% above the market price.
Visa has partnered with CashEdge and Fiserv to provide this service where a customer can enter a 16-digit Visa account number, phone number or e-mail address to send funds directly to that account. Financial institutions outside of the U.S. are already offering Visa personal payments with more than 70 program around the world enabling consumers to send funds to Visa accounts but this service is offered for the first time in the U.S. by a major payment network. The utility of Visa’s network will be enhanced by this service from enabling payments at the point of sale, to enabling consumers to pay one another. [1]
The market for personal payments is currently dominated by online payment company PayPal which has more than 94 million active registered accounts. Some recent startups such as Venmo and Square have also gained popularity. Square is processing about $1 million in payments per day and up to 100,000 new users are signing up every month which conforms the growing market for personal payments in the U.S. [2]
It is still unclear what kind of fees Visa will charge for this service, but it will definitely increase the number of transactions handled by the Visa’s payment network. The number of transactions processed by Visa has been growing steadily at around 10% year on year and reached 47.6 billion in 2010 as consumers become comfortable with the electronic payment systems. We expect the growth to continue fueled by the rise in plastic money, personal payments and mobile payments.
See our full analysis for Visa.
Notes:- Visa moves beyond point-of-sale, Delivers payments to U.S. account holders, Press Releases, Visa [↩]
- Visa Sees Dollars in Personal Payment Opportunity, Gigaom [↩]