VISA is a worldwide brand that a large portion of the global population uses on a daily basis. It’s one of the most effective international collaborations there have ever been, and it sits right inside your wallet. You probably don’t even think about it, but you’ve literally got the world in your back pockets because anywhere you go in the world, you can find VISA there too. Here are 20 fun facts you didn’t know about this mega company, including some things that you really ought to know.
Bank of America
The big bank piloted the program that will eventually become VISA’s platform. In 1958, Bank of America issued the very first consumer credit card known as the BankAmericard. The idea was to have one type of card that would be accepted by any type of merchant. At the time, it was increasingly becoming difficult for consumers to have different cards for different merchants. When Bank of America decided to launch the card program initially, they went ahead and mailed unsolicited credit cards to the area. Each one of those cards had a $300 limit. By 1959, more than 2 millions cards have been mailed all across California and 20,000 merchants have accepted the card. At this point, credit cards had been around for at least 30 years already, but people were still learning how to manage them. It isn’t difficult to imagine how the delinquency rate was up to 22% at that time, if the bank itself is sending cards to whoever will take it.
Because of the uniqueness and effectiveness of the platform Bank of America started, many banks wanted to utilize the system as well. Since Bank of America couldn’t launch the BankAmericard outside of California, the company opted to license agreements to other banks instead. This happened around 1966. The growth happened quickly. The network had even expanded to have a presence internationally. 10 years later, the system has grown so large that Bank of America and all the other licensees decided to form a new corporate structure for the card. This new structure became known as the Visa card, and it has stayed that way up to today. These days, the VISA name is no longer automatically associated with Bank of America; it’s become a standalone brand for most people.
If you don’t know much about the stock market but wanted to invest in something substantial, you should look into buying VISA stocks. The trend for the company is going nowhere down, and it’s known to survive even the most bearish of markets. VISA went public back in 2008, just a few days after the big Bear Stearns collapse. Since they’ve gone public, their stocks have overwhelmed the market. Since then, they haven’t slowed down quite a bit. As of 2017, VISA’s stock prices were up by 22%. It’s only a testament to how good of a product VISA truly is. Like mentioned before, you can’t go anywhere without seeing VISA somewhere. They’ve become a true modern tool, and if you don’t jump on the bandwagon now, you might end up missing out on quite a bit of money. The truth is you should’ve bought VISA stocks 10 years ago.
It comes to no surprise that VISA goes through and has undergone litigation after litigation. It seems that everyone is trying to sue VISA—private citizens, small businesses, and large corporations have all tried to sue the global payment company. Many of the lawsuits dealt with anti-trust issues. Some of them are about ATM fees, while others have been about card swiping fees. Even the U.S. Justice Department has sued VISA about antitrust issues. Many of these lawsuits were settled for undisclosed amounts. When the Justice Department sued VISA for a second time regarding their rules on banks doing business with American Express and Discover, VISA lost the case, but the verdict was upheld on appeal. At this point, both American Express and Discover sued VISA separately. You get the idea of the kinds of litigations VISA goes through, and these are just a fraction of them all.
Unique Business Model
While most people own a VISA card of some sort, they don’t really understand how the business of VISA works. VISA is not a bank. They don’t have your money in a vault somewhere, and they’ll never actually loan you any money. The company acts like a middleman that moves your money from one location (your bank) to another (the merchant you’re buying from). They make this transfer seamless and quick. In return, the company takes a portion of the sales revenue. Also, the higher the payment volume is, the more VISA makes. All of these are payments for services rendered by VISA. Simply put, these services include the authorization, clearing, and settlement of any transactions. While VISA may not make money from all the credit card interests that owners have to pay for, at least they don’t have to deal with the risk of card owners defaulting on their loans. It’s a win for VISA.
If VISA started having an international presence just a few years after it was began, it’s no doubt how wide the company’s global operation truly is. VISA is one of the truest global companies out there. It’s a name that is recognized everywhere. Visa Europe Ltd. used to exist back in the days to handle all European transactions. The small company had about 3,700 European banks that operated Visa products. Since Visa Europe operated separately from VISA Inc., VISA wanted to acquire the company and was able to do so in 2016. Apart from this European operation, VISA has other operations throughout the world, including in Asia and Africa. The company has a large network of operations, and it helps them conduct their business uniformly throughout the world.
Card Payment Organizations
VISA is considered to be the 2nd largest card payment organization in the world. You might be wondering why it isn’t the first. That position happens to belong to a China UnionPay, a financial services corporation based in China. The fact is VISA was on the top for a while until China UnionPay surpassed it in 2015. This was determined based on the combination of the total number of cards issued and the total value of card payment transactions in each year. If you’re wondering how a Chinese financial services company can outperform VISA at this point, you’ll have to consider China’s population domestically. They still have the largest population in the world, and UnionPay controls majority of that domestic Chinese market. VISA, on the other hand, has markets all over the world, but they only control up to a total of 50% of the international market.
The VISA Name
Where does the name VISA come from? What does it mean? Who came up with it? Does it stand for anything? When it was first used, the word visa was not really supposed to stand up for anything. The creators of VISA didn’t plan on an acronym to work. They simply wanted a word that was recognizable worldwide, a word that can be represented in every culture and recognized by most nations. They wanted a product that can be totally universal. That idea clearly worked, as VISA is one of the most recognizable business names in history. Nowadays, VISA actually stands for something: VISA International Service Association. Why they made up an acronym for VISA is lost to us. It probably would’ve been fine not being an acronym, but it might’ve been done for corporate reasons. Regardless, the name has always been a good one and definitely one that will stick around a while.
International Swipe Fees
In Poland, VISA charges an unusually high swipe fee, anywhere from 1.5%-1.6% of the final price of any transactions. This prompted a serious discussion in Poland about the regulation of interchange fees. In addition, VISA’s high fees prompted many people and businesses to forego the middleman and come up with new methods of payments. In Canada, Wal-Mart has threatened to stop accepting VISA because of the high swipe fees. In retort, VISA claims that any dispute should be handled without affecting the customers. If Wal-Mart stopped accepting VISA cards, which is probably the most common card in the western hemisphere, consumers will be largely affected. People won’t be able to use their cards, and without that, they’ll need to have enough cash to cover; a lot of people tend not to carry cash anymore. So not accepting VISA at any place will be a lose-lose situation for everyone.
Many people might not have even known that VISA is actually an American company. If you didn’t know about its history in Bank of America, you certainly wouldn’t have known that it’s an all-American corporation. That means that the headquarters of the company is somewhere in the continental USA—California, in particular. VISA’s headquarters are currently located in Foster City, California, but it wasn’t always there. VISA started out in San Francisco until it moved to San Mateo in 1985. In 1993, VISA moved to Foster City but moved back again to San Francisco in 2009. The company moved back to Foster City again in 2012, where it’s stayed up until today. VISA now also has a global information technology center located in Austin, Texas. This center was opened up in 2012.
Contactless payment systems have been around longer than people think. They were actually started over 20 years ago by ExxonMobil’s Speedpass. It took about a decade before banks jumped in the bandwagon, and VISA was one of the first financial services companies that did so. In September 2007, VISA established the PayWave, a way for their users to wave their cards in front of payment terminals without having to swipe or insert their cards into readers. The tech uses RFID technology. The highest take up for the program is in Australia, where over 50% of total transactions are made through PayWave. The PayWave is now known as VISA Contactless.
Security has always been a priority for the company. After having undergone quite a few litigations in the past regarding consumer information issues, VISA finally launched a program in 2013 to address security measures and improve confidentiality. VISA launched the Checkout, a service that will allow users to enter any of their personal and card information. They can then utilize a username and password to make purchases online. This online payment system eliminates the need of having to input card information on retailers’ websites, also eliminating the need to share personal information. VISA became the first company in Britain to adopt such an online payment program back in 2013, as Checkout went live in the UK, France, Spain, and Poland. The service also works across VISA’s products line—credit cards, debit cards, and prepaid cards.
Besides the VISA name, its logo has also become one of the most recognizable brand names throughout history. As most of us know, most parts of logos signify something significant in either the philosophy of a company or its history. The latter is true for VISA, as the logo shows more about the history of the company more than anything. The blue parts of the logo are supposed to signify the bright blue skies of California, while the gold parts represent the gold-colored hills of the state. California plays an important role in the history of the company. It is where Bank of America was founded, the bank that started the entire VISA movement. That was the original logo design. However, VISA changed the designs in 2005 to something simpler. They took away the iconic blue and gold stripes and replaced them with a simple white background. The VISA name covers most of the logo, written in blue, and an orange flick on top of the V can be visibly seen. In 2014, the logo changed again with the removal of the V and the background changed into a blue gradient. Changed yet again in 2015, the logo for the VISA Debit and VISA Electron were changed in favor of restoring the original blue and orange stripes. However, the main logo for the company remains the same.
VISA implemented a security measure back in the 80s in the form of a dove. In 1984, most of the VISAs issued around the world from that year on featured a holographic dove in front of the card. The dove can be found below the last four digits of the VISA card number. As a security feature, the holographic dove was supposed to appear three-dimensional. If the card was fraudulent and didn’t have the true hologram feature, the dove will not appear three-dimensional. To make room for this security measure, the VISA logo was significantly reduced to the bottom right corner. The dove feature on older VISA cards can be revealed through the use of a UV light. By 2005, the dove was moved to the back of the card and was eventually replaced by just a magnetic stripe.
For as long as anyone can remember, VISA has been associated with the Olympics. The fact is VISA has been a sponsor for the Olympics globally since 1986. VISA has also been a sponsor of the International Paralympic Committee since 2002. Since then, VISA has been committed to the Olympic movement and the many athletes that have crossed the Olympic stage over the years. The company has been instrumental to the success of the games, wherever they have been held in the last 4 decades. Being a sponsor, VISA is the only card accepted in any Olympic and Paralympic venues or programs. The contracts between the organizations are set to expire in 2020, and whether that partnership will continue on is up in the air. It’s a big contract for VISA and one that they’re likely working hard to keep.
VISA and Sports
Besides the Olympics, VISA is very active when it comes to sponsoring other sports and sports team throughout the world. VISA has been known to sponsor many teams in North and South America, including Argentina’s national basketball team and rugby union team. In addition, they have also sponsored Copa Libertadores and Copa Sudamerica, two of South America’s most important football tournaments. VISA has also sponsored sports teams and events in Europe, including the Rugby World Cup. The last time VISA sponsored the World Cup was in 2007 when the championship was in France. In that same year, VISA began to sponsor the FIFA World Cup. In the United States, VISA has partnerships with the NFL and some particular teams. The company has also been known to sponsor various racing events and even e-sports or professional gaming.
Current CEO Alfred F. Kelly Jr. has been in the same position since 2016. He has an extensive background in financial services, being that he worked for American Express for 20 years before taking up the VISA CEO post. When he resigned from American Express, he carried the title of President of the entire company. He’s also worked for other big companies previously including PepsiCo, The Hershey Company, and even The White House. Before he became CEO of VISA, Kelly’s last reported salary was $7.87 million in 2009. If that were broken down to an hourly position, it would mean that he made $838 per hour back then. That can even be broken down further to $15 per minute and $0.25 cents per second. That’s not a bad salary, especially considering that’s 20 times what the President of the US makes, one of his previous employers. At VISA, Kelly makes roughly $21.7 million in over compensation, which includes his salary, bonuses, stock options, stock awards, and other types.
Being a global company, it’s difficult to even begin to imagine how much the company makes in total revenue. In 2017, the reported revenue for VISA Inc. amounted to $18.358 billion. That’s a huge jump from just five years ago when the company reported $11.78 billion in overall sales and revenue. Since then, the company has made more each year, and they’re projecting an even more growth in sales in the next 5 years. However, out of that $18.358 billion in revenue, the net income comes down to $6.47 billion. It’s still a hefty sum, but the company also shells out roughly $12 billion in expenses each year. That amount has gone up over the years as well, although not as quickly as their revenue. Their net income 5 years ago was $4.96 billion out of the $11.78 billion revenue.
To top it all off, there’s approximately 500 million VISA cards circulating in the U.S. today. That includes all varieties of cards—debit, credit, and prepaid. So you can imagine how cards must be getting swiped from left to right every second of each day. It happens. The depth of the company and the security they need to handle is ridiculously extensive. So next time you swipe your VISA card, think about how many people must be doing the same thing in the world at the same moment.
The way VISA works is still unclear to some. We all know that they’re the middlemen, but how much does a middleman actually make? From the previous topic, we know that they’re not lacking when it comes to the money they make in revenue, but how exactly do they get to that point? The answer is simple. They charge quite a bit in fees. So every time you encounter a small business asking if you could pay in cash, you shouldn’t hesitate. For example, each time you swipe your credit card, VISA gets 1.51% of the transaction plus $0.10. We’re not sure what the significance of the $0.10 is, but that is the current interchange fee. So if you’re spending $100 at a store, VISA gets $1.61 cents out of that transaction. It may not sound like much, but think of it in a global scale. In 2008, then CIO of VISA International said that they process about 300 million transactions daily. Every transaction cost differently of course, but for the sake of simplicity, let’s pretend that those transactions amounted to $300 million in total sales. That’s a gain of $4.5 million in just transaction fees alone for that one day.