Visa (V): The Open Platform Shaping Financial Infrastructure

When it comes to the financial industry, a lot of investors’ attention in today’s markets has been on radical innovations: Bitcoin, stablecoins, fintech companies, etc. And this is partially justified, as these technologies and innovative companies have shaken an industry that had become a little too comfortable with legacy systems and decades-old inefficiencies with quicker and cheaper transactions, better assessment of loan risks, etc.

At the same time, the established players were not all passive actors in the face of these disruptions. Some of the largest payments companies have instead embraced back their roots as the original “tech-driven disruptors”, and led the charge in changing the infrastructures supporting the global financial system.

A good example is Visa, a company best known for its debit and credit cards. But it doesn’t issue the cards; instead, it’s a full-fledged tech company built around an open platform and an intermediary payment network, shaping global open banking infrastructure and providing modern cloud-native systems.

Visa Overview

Visa History

Visa was founded in 1958 by Bank of America (BAC ) as the BankAmericard credit card program. To grow the program, the company mass-mailed 65,000 people unsolicited & activated credit cards to residents in Fresno, California (“the Fresno drop“), literally kickstarting the US consumer credit card industry. Fresno was selected for its population of 250,000, BofA’s market share of that population (45%), and relative isolation to handle potential negative PR fallout.

By October 1959, the entire state of California had been saturated with over 2 million credit cards, and BankAmericard was being accepted by 20,000 merchants.

In response to competition from Master Charge (now Visa’s rival Mastercard), Bank of America began in 1966 to license the BankAmericard program to other financial institutions out of California.

These banks formed National BankAmericard Inc. (NBI) as an independent, member-owned corporation. National BankAmericard was then renamed Visa in 1976, chosen intentionally because it sounds the same in almost every language and signifies universal acceptance.

In the 1970s, Visa launched BASE I (an electronic authorization system) and BASE II (an electronic clearing and settlement system), paving the way for modern instantaneous digital payment tracking.

In the 1980s, a change in leadership led to Visa expanding its networks and working on keeping tensions between member banks low. It also launched the iconic Visa dove hologram, now a standard security device across the industry.

In 1987, Visa (V ) acquired Interlink and part of Plus Systems, giving Visa cardholders access to thousands of ATMs and the world’s largest point-of-sale network.

In the 1990s, Visa became a global actor, hitting the one trillion dollars mark in annual consumer purchases by 1997. By 1998, Visa had roughly 600 million cards in circulation worldwide.

It was also in 1994 that Visa adopted very early neural network technologies, the very same concept that underlay today’s AI developments, to analyze transaction patterns instantly and flag fraudulent activity at the terminal in real time. Visa also adopted chips in its cards as early as 1996 with Visa Cash.

The company was finally restructured in 2006-2008 to turn it into an independent corporation.

“The restructuring merged Visa Canada, Visa International, and Visa U.S.A., while its operations in Western Europe became a separate entity operated by its member banks.”

It IPOed in 2009 for $17.9B, in what was the largest Initial Public Offering in U.S. history at the time. It would, however, wait until 2016 for Visa Inc. to finally acquire Visa Europe Ltd, which had stayed a separate entity operated by its member banks.

Visa By The Numbers

If Visa passed the trillion-dollar mark in transactions in 1997, it has processed as much as $14.2T in 2025, a remarkable 14x growth in a little less than 3 decades. With this number up 8% from 2024, this growth pattern seems to be ongoing, largely because half of global transactions are still conducted in cash.

In total, the company processed 257.5 billion transactions in 2025, in 160 currencies, in 200+ countries.

In 2025, the company had 34,100 employees and generated $40B in revenues. This converted into $20.1B in GAAP net income.

While the international transaction segment is important to Visa’s strategic position, it represents only a fraction of the company’s total revenues ($14.2B). The largest segment of revenue is instead from data processing ($20B), where Visa provides banks and other financial institutions with authorization, clearing, and settlement.

Source: Visa

Of these revenues, a part is paid back to Visa’s partners as incentives to grow payment volume and increase Visa acceptance. This is important as the company is still competing intensely for market share with its arch-rival MasterCard, and also having to keep its position against new entrants.

Source: Visa

From an investment and financial point of view, Visa has strongly outperformed both the overall market and the financial industry. Its stock achieved almost double the returns of the S&P 500 Financial index in the past 10 years, and around half more than the overall S&P500.

Source: Visa

Visa’s Businesses

Visa’s Model

If Visa’s initial start was mass-mailing credit cards, the current business model is to let the partner banks issue the cards. Instead, Visa provides the tech infrastructure behind the payment systems. This is done through its proprietary global network, VisaNet, utilizing four secure data centers to handle over 30,000 simultaneous transactions per second (for comparison, the Bitcoin base layer processes 3.3 to 7 transactions per second).

Source: Visa

The structure of Visa payments is articulated around the so-called “Four-Party Model”:

• The Cardholder / Consumer initiating the digital payment.
• The Issuer, a financial institution like Chase or Bank of America that actually provides the Visa-branded card, manages the credit/debit account, and assumes the credit risk.
• The Merchant, who accepts the payment.
• The Acquirer: the merchant’s bank or processor that receives the payment data from the merchant and routes it through VisaNet to the Issuer for authorization.

The company’s core is still this payment processing system, articulated around consumer payments (high-volume credit, debit, and prepaid card) and commercial solutions (tailored corporate accounts, virtual cards) for business-to-business (B2B) supply chains and government procurement.

“We hold a leading share of about 40 percent in commercial card payments and are expanding into new use cases, like virtual cards for supplier payments and embedded finance for small businesses.4 In our Visa Direct business, transactions have grown roughly eightfold since 2019 to more than 12.5Bin 2025, making it one of the world’s largest money movement platforms. ”

But this segment is now complemented by Value-Added Services, making Visa into a fintech company as well. This includes advanced security, fraud management tools, consulting, open banking platforms (via its Tink acquisition), and data analytics for client banks.

“These offerings drove revenue of nearly $11 billion in 2025 and have grown at a compound annual growth rate of more than 20 percent since 2021 in constant dollars.”

This segment leverages the existing relationships with banks to deepen the relationship with Visa and further expand the company’s reach.

“This year, we expanded Pismo’s offerings to clients in more than five countries across four regions. In Risk and Security Solutions, our award-winning product, Visa Protect for A2A, is helping to detect and prevent fraud through the power of AI. In Consulting, we estimate that we helped clients realize over $6.5B of incremental revenue across almost 4,500 engagements.”

Lastly, Visa Direct is now adding real-time “push payment” rails that handle global remittances, gig-economy payouts, and insurance disbursements without relying on a traditional swipe or tap.

Overall, this diversity of offers makes Visa a one-stop shop for payment solutions covering almost all possible combinations of financial transactions between consumer, business, and government: B2C, B2B, P2P, G2C, etc.

Source: Visa

Visa Competitive Position

The early position of Visa in the payment technology market has ensured its multi-decade-long dominance of the field. But still, this does not mean it is unchallenged.

The first major competitor is, of course, MasterCard. The two companies have taken a different approach to the payment market:

• Visa is focused on high volumes to scale transaction counts, controlling a solid majority of Global Card Volume (60%) and S. Purchase Volume(70%).
  • Visa has prioritized internal development for blockchain layers, deploying its own multi-chain Stablecoin Platform(see below).
• Master card instead focuses on value-added services, with over 40% of Mastercard’s revenue stemming from consulting, fraud-prevention tools, and open-banking tech. It also deliberately pushes localized debit products internationally to win over emerging digital banking markets.
  • For new fintech products, Mastercard favors inorganic ecosystem expansions, notably purchasing infrastructure providers like crypto payment gateway BVNK.

So overall, Visa is a model of an integrated large-volume payment provider, while Mastercard is more specialized and more likely to grow through acquisitions. This likely results in maintaining the somewhat stable duopoly the two companies have established in the past decade.

Regarding new technologies like blockchain and AI-driven fintech companies, Visa is counting on its own internal development and economies of scale to beat new competitors. In that respect, the net profit margin exceeding 50% is of course a target, but also a major advantage as Visa can outspend and match any threat with massive financial firepower.

The only short-term realistic threat at the moment is from digital wallets like Apple Pay and Google Wallet. While these wallets currently process transactions via Visa credentials, they hold the power to abstract the card entirely and seamlessly route future transactions via cheaper RTP rails without the consumer noticing. The example of similar processes from tech giants in China (Alipay, WeChat Pay/Weixin Pay) is a good indication that it could happen.

A more serious threat could be in the international market and coming from national governments directly, especially in the context of a relative deglobalization of finance. For example, the Pix payment system in Brazil (capturing over 50% of domestic payments) and UPI in India can route money directly between bank accounts, cutting out Visa’s interchange fees completely. If more nations or economic blocks like the EU were to replicate this process, this could make Visa much more dependent on the US market alone. If the US dollar starts to lose its predominant role in international exchange and as a global reserve, this could also undermine Visa’s international competitiveness.

Visa’s Technologies

Evolution Of Existing Payment Ecosystems

As mentioned, the core of Visa technology is its well-established and ultra-efficient payment processing system, able to handle the majority of global card transactions every day.

It is today more convenient than ever, notably thanks to the shift to “tap-to-pay”, which now makes up the bulk of face-to-face transactions.

Source: Visa

This reshapes the payment system from the physical card to the omnipresent smartphones, also opening new growth venues for Visa.

“In 2025, smartphones were used to accept over $33 billion in payments volume via tap, more than doubling from the previous year. More than one in three Tap to Phone sellers were new to Visa, underscoring its role in expanding our ecosystem.”

Another recent evolution is the slow disappearance of the checkout in e-commerce.  Card-on-file commerce, where merchants store credentials for recurring payments, and “button” checkout via digital wallets from technology platforms and financial institutions now account for 84%of Visa e-commerce transactions.

“Manual entry guest checkout has dropped from 44 percent in 2019 to just 16 percent in 2025, and among our top 25 ecommerce sellers, it is less than four percent. ”

New Technologies

If the core business is still the center of the company, its management is acutely aware that the financial industry is quickly being changed by new concepts and technology.

“In 2025, the payments industry experienced one of its most dynamic years on record. We are witnessing a powerful convergence of technology trends: the rise of AI-driven commerce, the broad adoption of tokenized payments and data, the growing role of stablecoins and the digitization of identity. This isn’t an incremental change; it’s a fundamental rewiring of how money moves around the world.”

In finance, an increasingly hot topic is “tokenization“. This is often understood as the replacement of financial or real assets by a token for easier transactions. However, Visa’s definition of tokenization is very different, which can create confusion for investors looking at this topic.

For Visa, tokenization is a way to replace sensitive data with more secure “tokens”.  Transactions using Visa tokens had more than 35 percent lower fraud, saving $1.1B for the year.

“Tokenization replaces sensitive card information with a unique, secure digital identifier that can only be used in the specific context it was issued. Even if intercepted, it is useless to anyone else, keeping payments safe.”

So when Visa claims a high level of tokenization of its e-commerce transactions, this should not be understood as adoption of tokenization as understood in the first meaning.

Source: Visa

For this form of “real” tokenization, the company has the Visa Tokenized Asset Platform (VTAP), offered via the Visa Developer Platform, which enables financial institutions to issue, mint, burn, and manage their own fiat-backed digital assets.

“Visa has been at the forefront of digital payments for nearly sixty years, and with the introduction of VTAP, we are once again setting the pace for the industry. We’re excited to leverage our experience with tokenization to help banks integrate blockchain technologies into their operations.”

Vanessa Colella – Global Head of Innovation and Digital Partnerships

Regarding other blockchain technologies, Visa views digital stablecoins like USDC as a settlement layer rather than a competitor. It has integrated its systems with public blockchains and its Pismo infrastructure (acquired for $1B in 2024), piloting multi-chain systems that let financial institutions settle balances in stablecoin over Visa rails.

Another hot topic in the finance and payment industry is agentic commerce, where purchases are made by AI agents instead of humans.

AI is already influencing shopping discovery: Referral traffic from Generative AI to U.S. retail sites grew 1,100 percent from July 2024 to January 2025, accelerating to 4,700 percent year-over-year in July 2025”

Visa has partnered with major AI developers like OpenAI to engineer secure payment rails tailored specifically for AI agents executing autonomous consumer transactions.

“In April 2025, we launched Visa Intelligent Commerce, a framework to provide agents with Visa credentials while enabling trust, security and interoperability across the ecosystem.”

Overall, it is still too soon to assess what place Visa will take in a payment ecosystem heavy on agentic purchases, stablecoins, tokenization, and other AI and blockchain-related changes. But as the company has moved early to integrate these technologies, it is likely that these pilot projects and the existing payment network will ensure that they do not cause a surprise massive disruption for Visa.

The Investing Case For Visa

On the positive side, Visa has been the driving force to make payment cheaper, easier, and safer since its inception in the early 1950s. The company has been swift to embrace, and often directly cause, every major evolution of the industry, including chips, e-commerce, tap-to-pay, and now blockchain, stablecoins, and agentic purchases.

This ability to stay a lean and innovative company seven decades after its creation is the core of any investment thesis in the company, alongside the massive advantage of controlling the world’s largest global payment infrastructure.

However, it is also possible that the foundations of Visa’s business model are slowly getting eroded in the background.

National alternatives for domestic payments directly from bank account to bank account are multiplying in major countries and cutting Visa off the loop. Meanwhile, decentralized finance is aiming to remove the need for intermediaries like banks and Visa altogether.

Even if it is very likely that none of these threats will materialize immediately as missed earnings or massive competition any time soon, they might become an issue later.

So the main question for investors is not so much the immediate future, but whether the current valuation is correctly pricing these potential threats, and if the business’ growth will be enough to ensure good investment return five, ten, or twenty years in the future, especially as current P/E ratios are already pricing in some of that growth.

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